If my bank gets my direct deposit, why do I have to provide collateral?
Many consumers have the impression that because they have direct deposit, there is no chance a loan will fail and the bank must make that loan. This isn't the case. You may stop your direct deposit at any time and could redirect it to another institution if you wanted. Banks have to follow underwriting guidelines they develop for themselves. While direct deposit may lead to more favorable terms such as a lower interest rate, it won't act as the collateral for a loan.
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Many consumers have the impression that because they have direct deposit, there is no chance a loan will fail and the bank must make that loan. This isn't the case. You may stop your direct deposit at any time and could redirect it to another institution if you wanted. Banks have to follow underwriting guidelines they develop for themselves. While direct deposit may lead to more favorable terms such as a lower interest rate, it won't act as the collateral for a loan.
