Loan Guide for Losers
A person or body that provides another with a sum of money (loan) is called the creditor and the person borrowing the sum is called the debtor; normally finalized by a legal document as it is a binding arrangement between the two. The true definition would include, services, products or people (like staff) but for the purposes of this piece it is financial arrangements we are concerned with. Unlike most other types of loan, those involving cash will gradually be paid back over a period of time previously arranged; normally repaid in regular amounts, which can be on a monthly, but sometimes three monthly basis.
All monetary debts consist of two elements: the sum owed and the interest charge for the time during which it is payable over; this is added to the overall amount owed. It is not uncommon for a company to have a policy where the interest is front-loaded and paid first; then the capital sum is paid afterwards. However the normal way to repay a debt is to ensure that each monthly repayment combines part sum and part interest.
Acting as the provider is one of the principal tasks for financial institutions. Bank loans and credit are one way to increase a person's or company's money supply; other ways to raise capital are available but none as easy as this.
A mortgage on the other hand is designed for one purpose, that of purchasing property or land and is one of the most common types of long term debt individuals experience. The financial institution is given security however; in this case the title to the house, until the mortgage is paid off in full. This security means that defaulting on the loan may leave the lender with no alternative but to repossess the property; they have the option of selling it to reclaim their money or keeping it as an investment.
Even small loans can be secured but this generally only happens when a person has a poor credit history which could be the case of a person buying a car; 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.
The average person may have a number of unsecured loans or credit facilities and not even realize it; credit cards, a bank overdraft, even a line of credit for instance, are all examples of unsecured lending. The interest rates applicable to these different forms may vary depending on the lender, the borrower and the type of credit supplied.
Financial companies can be caught out too when they provide cash to a person so they can gain advantage over his or her situation; also known as predatory lending. An easy way to do this is for a credit card company to issue cards to individuals and encourage them to use the cards and then keep them paying these amounts off for a long time because they have such high interest rates. You would be wise to be wary of financial arrangements that seem to good to be true because they probably are.
Harry Gabriel - Virtual Wealth - http://www.iCheddar.net
Source: http://ezinearticles.com/
Added: April 18, 2008
Stocks bounce back after steep selloff - The Associated Press
Boston Globe Stocks bounce back after steep selloff The Associated Press - Investors got an additional boost after the Federal Reserve said it will extend the life of key programs aimed at loosening the credit markets and restoring ... Look For The Bounce; GE Revises Again; Lost At Sears Stocks rise on reassuring comments from Ford CEO