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Question for you.

Who can escape a customer with poor morals and morale quicker? An insurance company or a financier?

The difference is, mostly, in the term of the contract. Generally insurance contracts are renewed every 12 months and before the contract is renewed, the insured must make a full disclosure again of things that happened in the previous 12 months such as accidents, speeding fines, criminal convictions, and even accidents that the insured person did not make a claim under the policy for. The insurance company can decide whether to renew the policy for a further 12 months, and take the risk of a financial loss for a further 12 months. The insurance company can also elect not to renew a policy or even cancel the policy anytime during the insurance year. In essence the insurance company can escape "risk" quickly if the insured person for a number of reasons becomes an undesirable risk.

Not so with financiers. Once money is handed over the financier is on risk until the loan is re-paid in full or compromised. This means, unlike an insurance company, who can leave the relationship at any time, a financier must endure a change in a customer’s morals and morale. Loans can vary in terms from 1 year to 30 years, depending on the type of the loan. The risk for the financier is being repaid in full. It is not simple, if at all possible in some cases, for a financier to escape a contract where a customer refuses to pay or constantly defaults on payments. Why? Where will the money come from to re-pay the financier?