You have to realize though that the money loaned is created out of thin air, and is not a real loan. The item loaned (money) devalues at a rapid pace, it's currency, not money.
It makes it evil/immoral.
Over in the Muslim countries where interest is illegal, this is how the banks works (explained by a friend in KSA).
You need a loan, but don't have any money - you are out of luck.
But lets say you can buy a car, but need to save some of the money. You then buy the car with you own money, and then sell it to the bank, which you will then rent to own. That's legal.
(My friend doesn't speak good English, so it's hard to get what he said perfectly, but this is the general idea.)
Its stops a loop of immoral borrowing when you are unable to pay, because you have to have the assets to purchase it before hand, and then whatever you do with it after wards.
They are still working on a system (banking) that creates money out of thin air (fiat), and they don't like it, but they have modded the system to limit wild borrowing.
In our system, eventually you can loan out ~9x any deposit in the bank, making the interest rate lets say 10% * 9 = 90% a month (or more). It transfers all the wealth to the rich, destroying the people. Cut back the loans, people can't pay, and the bank gets all the assets. It is flat out evil and immoral once you truly understand it.
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