<prompt> Human: The wisdom around here is to take low interest loans and invest the rest. For example some new car loans are 0 to 2. My friend has a used car loan somewhere in the 3s. You can put it in the market or even something safe like a CD if the rate is low enough.So whats the catch? The banks are obviously smarter than us little guys. If we could somehow hack them and invest the rest in a more optimal strategy, well why arent the banks just doing that in the first place? Like why even originate a car loan at 0, 1,2 or even 3 when they can just be putting it in the market or in some cases a CD themselves.Assistant: Look up NIM, or net interest margin. Its how banks make moneyHuman: I read the wiki on that just now, thanks.It still doesnt address the question though. If we, as individuals have a lot of capital 30k windfall its dumb to use that to service low interest debt because we can make more in the market or even something really safe.Why doesnt the same logic apply to the bank? The bank has a lot of capital 3.000,000,000 from depositors. Why would they originate low interest debt when they can make more in the market, or even something safe like a bond or CD.The point is if we can do this hack why isnt the bank doing it right off the bat as opposed to originating low interest debt. Both strategies have a positive NIM so to speak.Assistant: I think it is the same reason that people buy bonds instead of stocks, despite lower returns - because it is less risky.Human: So the catch to the put it in the market crowd is risk? The market could be at a low point when the person doesnt have a job or is injured or whatever? Then the borrower cant cover the note.Still though there are some notes originated for less than some CDs or HYSAs pay. Why pay for this elaborate operation with finance guys and repo agreements and run default risk to originate a low interest note when they could just put it in a CD instead. A CD sounds heck of a lot safer than originating a car note  <response>: It is risk, yes. The stock market has averaged 10 in the past but it has also crashed by 50. And past performance is not a guarantee of future returns- look at Japan. Even looking at the US, if you were unlucky enough to invest in the US market in January 2000, you would still have less money by ten years later. Now it did eventually come back, but if you invested in the Nasdaq, it would have been fifteen years before it did- it only got back to 2000 levels in 2015. It may well dip below 2000 again in the next crash.Banks are not immune to going bust- look Lehman Brothers. And that they were the largest casualty is only because the government stepped in and bailed out the financial system.Now Lehman Brothers was an investment bank and investing is what they do, but I just bring that up to highlight that throw it all in the market is not without risk, even if you are a 600 billion enterprise, the whole thing can come crashing down.Retail banks have much more regulation as to what they are allowed to invest in and how much risk they are allowed to take with customer deposits.The take a low interest loan and stick it in the market is good advice on aggregate, but only if you have a very long term perspective and you would be OK in the short term losing 50 or more of what you stuck in the market and still be saddled with having to pay back your low interest loan. Thats the possibility, thats the risk you are taking.Long term it tends to go up. So if you can weather the long term, and you are happy taking the risk that it goes down in the short term and short term can be as long as a decade or more and you still have the debt, then this is who the advice is targeted at. 