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Saturday, March 17, 2007

Loan--Types & abuses

A loan is a type of debt. All material things can be lent but this article focuses exclusively on monetary loans. Like all debt instruments, a loan entails the redistribution of 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. This service is generally provided at a cost, referred to as interest on the debt.Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding. Bank loans and credit are one way to increase the money supply.
Types of Loan
Secured LoanA mortgage 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.In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer.Unsecured LoanThese may be available from financial institutions under many different guises or marketing packages:credit card debt,personal loans,bank overdraftscredit facilities or lines of creditcorporate bondsThe interest rates applicable to these different forms may vary depending on the lender, the borrower. These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974.
Abuses
Abuse in the granting of loans is known as predatory lending. It usually involves granting a loan in order to put the borrower in a position that one can gain advantage over him or her. Where the moneylender is not authorised, it could be considered a loan shark.Credit card companies in some countries have been accused by consumer organisations of lending at usurious interest rates

Auto Loan

Under Construction

Home Loan


What is a Home Improvement Loan?
Well, it's all in the name, isn't it.
When couples decide that they want to get on with those heavy duty renovations they have been planning on their home for years, they are usually in need of some financial backing. Home improvements don't come cheap, and so most people have to borrow money in order to fund the cost of improving their homes. In short, this is what is referred to as a home improvement loan.

Is a Home Improvement Loan Right for You?
That all depends. You won't have any problems finding a lender willing to do this for you - that much is for sure.Lenders like to do this, because making the right improvement to the right kind of property can add a great deal of value to your home.Just by converting a loft into a bedroom can add a great deal of value to your home, which will in turn increase the value of your property. So why does the lender like this? Because he owns you house until you completely pay it off.You should also bear in mind that not all home improvements will guarantee a return on the investment.It is possible to over-improve your home, so beware. Taking out a home improvement loan is no small matter, so you want to be sure it's going to pay itself off in the end.

What is a Home Refinance Loan?What is Refinancing?When interest rates drop you have an option to refinance your home loan. When you refinance you settle on a different loan interest rate.What are the advantages of Refinancing?If you Refinance at a lower interest rate you will save money. You will pay a lower interest rate and therefore your monthly payment will be lower.What are the disadvantages of Refinancing?Refinancing with a bank usually involves fees and charges. In order to decide whether refinancing is advantageous you must calculate the savings and determine whether they outweigh the upfront charges.When should I Refinance?When the interest rates are down usually home mortgage interest rates are down as well. It is best get a mortgage or refinance when interest rates are low.

Student Loan

Student loans are loans offered to students to assist in payment of the costs of professional education. These loans usually carry lower interests than other loans and are usually issued by the government. Often they are supplemented by student grants which do not have to be repaid.

In India
Loans for education are mostly available from nationalized banks. Also if you want to pursue higher studies abroad you can apply for loan at any bank at a very nominal interest rate.

In Australia
In Australia, students can pay for university courses using the Higher Education Contribution Scheme (HECS). The selection criterion for HECS is based on the rank achieved in the secondary school final examination. HECS fees are government-subsidised and are substantially cheaper than full-fee paying places which have lower entry requirements.-Courses are ranked into three bands, with a year's tuition costing around $4,000–$6,000 AUD. Students have the option of deferring the HECS fee until they start earning above a certain threshold, whereupon they will repay the government through the tax system; the amount owed is indexed to inflation. Alternatively, students can pay upfront at the beginning of the semester; this option provides a 25% discount (2004).Recent legislative changes that allow a high proportion of full-fee paying places, and lower upfront payment discounts have been a source of controversy.

In United States
Loans for higher education
FEDERAL LOANS TO STUDENTS
FEDERAL STUDENT LOANS TO PARENTS
Private student loans
FeesEligibility
Types
Discharge
Disbursement: How the money gets to student or schoolProblems

Useful articles

Loan--Types & abuses

Auto Loan

Home Loan

Student Loan