No wonder the banks can carry on ripping us off..

Banks don't loan their own money, they loan the money of their depositors.

Not quite right.

They "lend" money that isn't even there. It's called Fractional-reserve banking:
http://en.wikipedia.org/wiki/Fractional-reserve_banking#Money_creation_process

Look at the graph. The formulas use 20% as an example, though in reality 5% is more the norm.
Therefore, m = 1/.05 = 20, so a deposit of $1000 balloons into $20,000 !
From another article:

The Bank of England explains this process:

"In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans. Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money."

This creates money out of thin air, or more precisely, via computer bits.
When you get a car loan the bank doesn't give you a wad of cash. They're not stupid. The "money" (computer bits) is deposited into the car dealer's account. Yes, another deposit, which can be lent out again ... and so it continues.

BTW, you don't own the car, the bank does. And it doesn't end there. They can sell your note, or obligation, to other "lenders", which often happens with mortgages.

You pay interest on this bogus money. Got credit cards? Better pay them off each month or you will be royally screwed. They have various schemes for increasing what you owe. Banks have a derogatory term for people who clear their credit accounts - freeloaders. Ironic, eh?

If you were to try this Ponzi scheme you'd probably go to jail, but it is legal standard operating procedure for banks, and why we have inflation.

Plenty of books on this subject. Take care.

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