|
  |
|
|
What is a Loan?
When a sum of money is lent to another with the purpose of it being paid back it is called a monetary loan; normally finalized by a legal document as it is a binding arrangement between the two. Whilst just about anything, product or service can be lent out; the information below focuses on financial arrangements only. Like all debts, a monetary loan entails the gradual payback of the initial sum borrowed over time, between the lender and the borrower; normally repaid in regular amounts, which can be on a monthly, but sometimes three monthly basis. When debts are repaid a charge is added to the sum owed called ‘interest' which is how the lender can gain from the service he has provided. Some companies add the interest onto the repayments but make sure this is the first part to be paid so a number of monthly payments might be required before the capital repayment actually starts to be paid. Others will repay the debt in equal installment with the interest as part of this amount. Most of the time, this is the only contact the majority of people have with financial companies and it is just one of many roles they have; although this is the most important. Bank loans and credit are one way to increase a person's or company's money supply; although other money raising methods do exist. Arranging a mortgage, whilst a little more complicated, is in essence the same but the use for which it is required is not flexible and the money can never be used for anything other than buying a house or land. Debts of this nature are of course much larger than the standard and the lending company requires some security from the borrower; the standard method is by retention of the title to the property until the debt is paid back in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it; they have the option of selling it to reclaim their money or keeping it as an investment. In some instances, this method of security can be used when taking out a loan for a car for instance; where a car is purchased using this method, it becomes the security for the amount borrowed. Whilst secured loans can last a considerable time, this is usually as long as it remains possible for the finance company to reclaim costs should they need to sell the item; for cars, this very rarely extends beyond five years. Financial companies organize unsecured loans everyday although many people do not even realize that is what they are being provided with; this can include the credit card, personal arrangements, bank overdrafts and other forms of credit. The interest rates applicable to these different forms may vary depending on the lender, the borrower and the type of credit supplied. In some countries, predatory lenders are called loan sharks and it is where they supply money at high interest rates with the sole intention of gaining control over a person. This type of lending also takes place with credit card companies around the world who issue credit cards with high charges which take a disproportionate amount of time to pay off; even small balances, just to retain a customer. You would be wise to be wary of financial arrangements that seem to good to be true because they probably are. |
|
 |
|
No reactions yet.
Please login or sign up to rate this intel.
Please login or sign up to add a comment.
The copyright for this content entitled "What is a Loan?" has been specified by the contributor as:
All Rights Reserved
This content may not be copied, distributed or adapted by anyone under any circumstances.
|
|
May, 2012
2008
January, February, March, April, May, June, July, August, September, October, November, December
2009
January, February, March, April, May, June, July, August, September, October, November, December
2010
January, February, March, April, May, June, July, August, September, October, November, December
2011
January, February, March, April, May, June, July, August, September, October, November, December
2012
January, February, March, April, May
|
|
Not a member yet?
Qondio is a powerful network for making it online. If you have a website to
promote, we can help.
Sign up and get in on the action.
|
|
Welcome to Qondio! Discover the awesome power this network can deliver by going to our About page. Or you could skip straight to the Sign Up form.
|
|
