Finance Information

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Finance Information   »»  Loan

Loan is like a debt.All material things can be lent financial assets over time, between the lender and the borrower.The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments to the lender.Legally, a loan is a contractual promise of a debtor to repay a sum of money in exchange for the promise of a creditor to give another sum of money.

Types of Loans

  1. secure loans
  2. unsecure loans
Secure Loans are mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security - a lien on the title to the house - until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.
Unsecure loans may or may not be regulated by law and these are taken under the different interest settled between the lender and the borrower. Sources of unsecure loans are like:
  1. credit card debt
  2. personal loans
  3. bank overdrafts
  4. credit facilities or lines of credit
  5. corporate bonds