Saturday, January 8, 2011

Guest Post: Loan - A Part of Debt

The following is a guest post contributed by Neo Anderson. Enjoy!

Loan is an arrangement of money in which lender gives money to a borrower for some purpose, and then the borrower agrees to repay the money along with some interest. Loan can be paid in regular installments. In this process of loan lender have <a href="http://smart-finance-solution.blogspot.com/">benefit of earning</a> an extra amount on the loan. While in case of legal loan which is based on some contracts is under some restrictions and obligations which the borrower has to follow. Loan can be available for House, Education, Car, Two-wheeler loan, Personal loan and Trade loan. In Education loan repayment starts when the person starts earning.

There are three types of loan including Secured loan, unsecured loan and Demand loan.

Secured loan are those loan which are granted to the company or an individual on the basis of some assets which acts as a collateral security. This collateral security acts on the safer side as non - payment of loan, this security will go to the borrower under certain terms and condition.

Subsized loan is also a part of secured loan in which you will not gain interest unless you began to pay the amount. On the other side there is Unsubsized loan is one in which interest is started as soon as the distribution of loan takes place. This proves to be disadvantage because as compared to sub sized loan the lender has to start paying the amount immediately weather he has paid money or not well in sub sized loan when he collects the amount he can pay and began to give interest.

Unsecured loan is the second part of loan which is borrowed without any secured assests.This loan can be easily available from the financial market under terms and conditions. Unsecured loan includes credit card debts, bank overdraft, and personal loan. The interest rate will be depending on the borrower and lender which may or may not regulated under the law. This type of loan contains risk because wheather the lender will pay the amount or not.

Demand loan is the third part of loan which is for a short period less than 180 days, this type of loan contains interest at a floating rate which can be varied at a prime date and they didn’t contain fixed date of repayment.


Contributed By: Neo Anderson