In the ancient times before the dawn of DeFi (also known as 2018), lenders competed with one another by offering loans that were custom-built for each borrower. Understanding why is pretty simple if we tell you a simple story.
Jane is smart with her money. She opens her mail right away, pays all of her bills on time and never overdraws her bank accounts. If Jane asks you to borrow $5 and promises to pay you back $6, would you do it?
Joe is less smart with his money. He only opens offers for new credit cards, doesn't know how to write a check, and hasn't had a job in years. If Joe asks you to borrow $5 and promises to pay you back $6, would you do it?