Home / Attorny / Role of Loan in development of financial system

Role of Loan in development of financial system

Role of Loan in development of financial system

The first man landed on the world was owner of the whole land but he chose to dwell in a cave that he found peaceful, safe and best place to rest. By the passage of time his urge to stay safe and strive to survive transformed him into family, tribes and nations. As well he fascinated his dwelling to be gorgeous hence his wishes leaped high and he desired to have a magnificent house. To earn to live transformed into small business activity and so on an established businesses. Money fueled all such activities and smart brains wishing to run the marathon need it eagerly. Scarcity of sources propelled them to look around for financial assistance. Friend and families are the best options but sometimes strain the relations. Needs emerged into veracity of financial solutions and people started borrowing and lending money themselves on trust. Disputes induced them settlement through guarantors and setting terms & conditions for amicable conclusion. The chunk of this money earned a name “LOAN” that ventured the dreams turn into reality. Somewhere “Loan” proves immediate remedy to solve the dire financial needs in daily life and elsewhere infuse fresh blood to the tiring businesses.
The traditional financial system based on craziness of borrowers to mitigate their problems and allure of incentive/interest earned by lenders evolved organized financial services. Here emerged a market place where customers came across various financial products matching each individual need. According to financial needs, best solution is always ahead in shape of multiple loan choices to ease and smooth-line the routine life of general public as well as good opportunities to strengthen the business community.
These financial solutions for common man include Credit Card, Personal Loan, Home Loan, Medical Loan, Car Loan, education loan etc. and for business community small business Loan, industrial Business Loan, Commercial Loan and Business Running Finance etc. detail of that and how such monetary facility can be availed is elaborated in next columns.


What is a LOAN

Role of Loan in development of financial system


The Loan is a term used for the amount of money that is borrowed from any person, organization or bank on specific terms and conditions usually on a collateral security, for a certain period of time. The borrower has to pay back to the lender the principal amount with an extra amount as an interest being paid back as charge for providing monetary services.
Need of a Loan
When a person is facing an un-expected expense; for medical emergency, for wedding, to purchase a car etc., he needs financial assistance in shape of a loan to meet the purpose.
A growing business that lacks liquidity crunch to regulate its activities, or to use its full business potential, also needs funds to meet the financial requirements.
Which is the best Loan
If you need to borrow the money, keep in mind that all loans are not offered equal. First, realistically assess how much money you actually require and which type of loan is right for your need. There are many types of Loans available in the market that caters your requirements. Evaluate how much to pay back including processing fees and interest.

Category of Loans
A. Personal Loan
B. Commercial Loan
A. Personal Loan is taken on provision of simple guarantee or back up of small assets like your home or car and approved in a short time by completing simple formalities.
B. Commercial Loan is taken by businesses against commercial mortgages and providing corporate bonds after completion of lengthy formalities. It is based upon credit rating of the borrower.
.
Types of Loan
i) Un-secured Loan ii) Secured Loan
i) Unsecured loan is used for emergent requirements like consolidating debt, major purchases, huge medical bills etc. These are unsecured loans because no collateral is required for approval.
The following are unsecured loans:-

  1. Short Term Loan
    You can obtain a short term loan against your credit card.
  2. Informal Loan
    A good option is to borrow money from any friends or family member to meet the immediate need. To avoid strain to relationship, a promissory note can be prepared to protect the interest of both parties.
  3. Unsecured Personal Loan
    Personal Loans is offered against your bank credit history or an assurance from your employer. It has lower interest rate as compare to credit card.
    B- Secured Loans
    Secured loans are offered with lower interest rates than unsecured loans. It is backed up by collateral in shape of your assets like house or car etc. to secure the risk of default.
    The following are most common secured loans:
  4. Secured Personal Loan
    Personal loan is a small loan whereby a certain amount is borrowed against the car value or provision of any surety.
  5. Auto Loan
    It is a secured loan taken against any asset or certain guarantee. The title of car is handed over to lender till pay back of the loan otherwise car can be re-possessed.
  6. Home Equity Loan
    This loan is offered for renovation of house. In this loan the borrower’s home is used as a source of collateral. The payment schedule is flexible monthly installments with lower interest rate. This loan is also used for major medical bills and for education purposes.
  7. Small Business Loan
    This loan helps small entrepreneurs to re-start or expand their businesses according to their business plan. The lending agency indemnifies this loan by any assets or business guarantee.
  8. Commercial Loans are more secured loans because these are approved after providing commercial mortgages, corporate bonds and after completion of lengthy formalities keeping in view the credit rating of the borrower.
  9. Business Loans Getting a business loan take a lot of time and hectic effort as it requires detailed business information, supporting documentation and pledge of sureties etc.
    Mortgage
    Mortgage is type of a loan that makes buying a home possible. It is taken out to purchase property or land to build own house.

It is a long term loan with lowest interest rate is secured against your house or real estate that is kept as collateral. Lenders require proof of your income & expenditures like household bills & personal expenses etc. and give approval for a certain amount which will be paid back in installments along with interest. Lender might refuse to offer mortgages if he thinks you are not able to afford paying back regularly. Moreover, if you decline repayments, the lender can takes back your house to recover his investment.

There are various types of Loans and Mortgages in the market. The borrower has the choice and options to assess which is better for them. He has to be aware of hidden charges, down payment, mortgage proceedings, inspection fees and closing costs etc. As mortgage depends on assessment of individual credit score or job status besides rates of property and pay back plan. Moreover the legal aspect of failure of repayments and risk of property auction by the bank is also being kept in mind.

Attorney


He is a person having legal right to act on your behalf at any forum. Attorney helps in approval of Mortgage & Loan for individuals and businesses.

Apply for loan involves hectic thinking, extensive documentation and lot of time and effort. You have to prove your eligibility, respond queries & questions but the approval process takes longer than you expect and receiving the loan becomes a dream story. To avoid potential legal headaches, filing the case through an Attorney is an intelligent decision.
An Attorney, on your behalf, researches the best options in lower fee. He helps you avail the best opportunity to get a loan in a seamless & simple way. Being a professional, he knows product variants and has good access to loan provider who has solid reputation. He gives due diligence for getting suitable loan for you, on competitive interest rates with suitable frequency of repayment schedule. He can negotiate well and file strongest case on your behalf with right documents and right procedure.

What is a LOAN
The Loan is a term used for the amount of money that is borrowed from any person, organization or bank on specific terms and conditions usually on a collateral security, for a certain period of time. The borrower has to pay back to the lender the principal amount with an extra amount as an interest being paid back as charge for providing monetary services.
Need of the Loan
When a person is facing an UN-expected expense; for medical emergency, for wedding, to purchase a car or buy any domestic items, he has to turn towards financial assistance and get the loan to meet the purpose.
Sometimes a growing business that lacks liquidity crunch to regulate its activities or to use its full potential or to stay competitive in the market, needs funds to meet the financial requirements.
Which is the best Loan
If you need to borrow the money, keep in mind that all loans are not offered equal. Firstly, realistically assess how much money you actually require and which type of loan is right for your need. There are many types of Loans available in the market that caters your requirements. Evaluate how much to pay back including processing fees and interest.

Category of Loans
A. Personal Loan
B. Commercial Loan
A. Personal Loan is taken on provision of simple guarantee or back up of small assets like home or car and approved in a short time by completing simple formalities.
B. Commercial Loan is taken by businesses against commercial mortgages and providing corporate bonds after completion of lengthy formalities. It is based upon credit rating rather credit score of the borrower.
.
Types of Loan
There are two types of loan namely :
i) Un-secured Loan
ii) Secured Loan

A. Unsecured loan is used for variety of emergent requirements like consolidating debt, major purchases, huge medical bills etc. These are unsecured loans because no collateral is sought for approval.
The following are unsecured loans:-

  1. Short Term Loan
    You can obtain a short term loan against your credit card.
  2. Informal Loan
    A good option is to borrow money from any friends or family member to meet the immediate need. To avoid strain to relationship, a promissory note can be prepared to protect the interest of both parties.
  3. Unsecured Personal Loan
    Personal Loans is offered against your bank credit history or an assurance from your employer. Personal loan offer lower interest rate as compare to credit card hence it has a big saving.
    B- Secured Loans
    Secured loans are offered with lower interest rates than unsecured loans. It is backed up by collateral in shape of your assets like house or car etc. to secure the risk of default.
    The following are most common secured loans:-
  4. Secured Personal Loan
    Personal loan is a small loan whereby a certain amount is borrowed against the car value or provision of any surety.
  5. Auto Loan
    It is also known as Title Loan that is a secured loan taken against any asset or certain grantee. The title of car is handed over to lender till pay back of the loan otherwise it can be re-possessed.
  6. Home Equity Loan
    This loan is offered for renovation of house. In this loan the borrower’s home is used as a source of collateral. The payment schedule is flexible monthly installments with lower interest rate. Home equity loans are also used for major medical bills and for education purposes.
  7. Small Business Loan
    This loan is provided by the Business support organizations or banks to small entrepreneurs to help them start or expand their businesses according to their business plan.
    The lending agency indemnifies this loan by any assets or business guarantee before approval.
  8. Commercial Loans are more secured loans because these are approved after providing commercial mortgages, corporate bonds and after completion of lengthy formalities keeping in view the credit rating of the borrower.
  9. Business Loans Getting a business loan take a lot of time and hectic effort as it requires detailed business information, supporting documentation and pledge of sureties etc.
    What is Mortgage

About user

Check Also

Terrible impacts of Corona infection

The cherubic infection has terrible impacts on well being. Doing so is influencing human life …

Leave a Reply

Your email address will not be published. Required fields are marked *

Close Bitnami banner
Bitnami