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About Loans

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 [asset]s over time, between the [wiktionary:lender] and the [wiktionary: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]. A borrower may be subject to certain restrictions known as [loan covenant]s under the terms of the loan.

Acting as a provider of loans is one of the principal tasks for [financial institution]s. For other institutions, issuing of [debt] contracts such as [bond (finance)] is a typical source of funding. Bank loans and credit are one way to increase the [money supply].

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 Secured A [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 [Default (finance)] 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.

A type of loan especially used in [limited partnership] agreements is the [recourse note].

Unsecured These may be available from financial institutions under many different guises or marketing packages:

[credit card] debt,
personal loans,
[bank] [overdraft]s
credit facilities or lines of credit
[corporate bond]s

The [interest rate]s 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 [Predatory lending] is one form of abuse in the granting of loans. 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].

[Usury] is a different form of abuse, charging excessive interest. In different time periods and cultures the acceptable interest rate has varied, from no interest at all to unlimited interest rates. Credit card companies in some countries have been accused by consumer organisations of lending at usurious interest rates and making money out of frivolous "extra charges" Credit card holders pay Rs 6,000 cr 'extra' [May 03], [2007]

Abuses can also take place in the form of the customer abusing the lender by not repaying the loan or with an intent to defraud the lender.

See also

[Finance], [Personal finance], [Settlement (finance)]
[Debt], [Consumer debt], [Debt consolidation], [Government debt]
[Bank], [Fractional-reserve banking], [Building society]
[FAFSA]
[George D. Sax] and the Exchange National Bank of Chicago - Innovation of instant loans
[Annual percentage rate] (a.k.a. [Effective annual rate])
[Interest-only loan]
[Student loan]
[Payday loan]
[Refund Anticipation Loan]
[Federal student loan consolidation]
[Federal Perkins Loan]
[Stafford loan]
[Title loan]
[Syndicated loan]

References

Information Reference: Wikipedia.org

Loans

Questions and Answers

What banks have personal loans with 4 year deferment of repayment options?

Q) Homeowner, good credit rating, need it for my daughter's university expenses, so that she can pay after she graduates. Student Loans Company Uk won't give her anything because she is going abroad. Thanks. PS I'm in the UK

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loans......................................................................?

Q) Ive recently turned 18, im trying to get a loan for a car why wont noone accept em and does anybody know who would be the best people to try in england?

A) Yes try welcome finance... they will lend to pretty much every one, as long as you work. Also try and get a copy of your credit report as there may be wrong info on there that is stopping you from getting credit.

What student loans/grants etc would i be able to get at uni?

Q) i am going to uni next year and cant wait, i'm so looking forward to it. The only problem that i have is that i am a single mum on benefits, and am worried how i will afford to support my 2 kids while studying. Has annyone got any idea of the loans/grants etc that i may be entitled to while at uni? thanx in advance. I live in the UK

A) You'll be entitled to a loan to pay for the tuition fees, a loan to help you live & a grant, you may also be entitled to a bursary from the uni you're attending & may be even a hardship grant. You'll have to pay these loans back if you are earning more that £15k a year oh & remember that you have to reapply at the start of each new year. It's a lot of really hard work, expect to spend at least eight hours a day on your course, tutors like that, treat it like a full time job that you are paying for. Good luck. P.S. My Mum managed to do it as a widow with 7 children. It can be done.

How can I get the educational loans to study in USA?

Q) Dear People I am a boy of 17 years and I am in India and Sir, I want to do my Under-graduation in an USA university and I need so financial aid like scholarships and Loans. But, Some says that, I must have a US-citizen or a permanent residents in US to sign as co-signer, But I have no relative or friends in US to sign as a co-signer. So I want to know, How I can get loans without co-signers.

A) You need to think long and hard about borrowing money to go to school in the States. Many people think you can just stay here and work ater college, you will quickly become rich and easily pay back the loans. This is not the case. Most will have to return to their countries. If you borrow $200,000USD, the for 4 years at a top US collge, how will you pay that back if you return to India? That would be very hard to pay back if you stay in the US! It only makes sense to come to a US school if you can get a scholarship. Get great grades and SAT scores and apply to schools that have scholarships for international students.

What happens with paying back UK student loans if I go to finish education in the US?

Q) I'm british currently studying here in England, but am wondering about taking a post-grad course in the US. The biggest question I have is about my current student loan (soon to be loans). I'd need to get financial aid from the U.S. uni to do it. But I'm not sure how things would work out with paying back my UK loans. Would they let you leave the country when you have loans to re-pay? Obviously they must do but.. it's confusing as to how things would work.

A) check out this site! they'll help you lower your student loan payments significantly.

Uni students only have to pay back their students loans if they earn more than 15 thousand pounds. Is the?

Q) government concerned about students that will move abroad after they graduate?? What if they move abroad, can the government track them?? Im just trying to figure how much money the goverment loses on student loans

A) If you live abroad and pay tax in that country for two years your student loan is cancelled and you don't pay anything back. It's in the small print.

Advice welcomed regarding consolidation loans in the UK?

Q) I'm struggling to juggle loans and have enough to live on. I work full time and apart from one credit card, I've managed to keep up with repayments. Can anyone suggest who the best company would be to discuss an option that would reduce my monthly payments.

A) have a look at this website offers lots of tips & advice http://www.moneysavingexpert.com/

I am now lending,How do i get legit borrowers who need loans for Businesses and Projects?

Q) I am now lending and i am newly registered.I need borrowers who need loans for Businesses and projects.

A) I suppose there must be magazines for small businesses, you could always try advertising in one of those.

Does Anyone Know Of Any Banks That Do Loans For Poor Credit?

Q) I am currently in the process of looking for a loan, my credit isn't the best so i am aware im hardly going to get great rates. I know there are companies and banks that do loans for people with poor credit, but the only one i know of is Welcome Finance, can anyone suggest any others?

A) Your best bet would be to check out some Credit Unions in your area- they usually will be far more flexible with their lending requirements but in turn do charge higher interest rates. I would avoid anything geared for "poor credit lending"- they usually assume that because you have poor credit, you have poor knowledge on the topic and have extremely difficult terms.

iwould like to know how i can start my own restruant i am in dependent visa in uk.if any loans can i get?

Q) own restruant want to start in uk,i am holding dependent visa.can i get any loans for this business.i am a proffesional chef.

A) First you need to write a business plan, no one is going to invest in someone without a business plan. Then decide on how you are going to finance the whole thing. Raise money from private backers, finad a silent partner, banks are not the only places you can raise finance from. Your current visa status could have an impact on your ability to get a loan from a bank, but private money wouldn't care less.

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loans.....?

Q) I got someone to cosign for my autoloan but will they be able to if they have a few loans already taken out?

A) only if their credit allows it, if they are not capable of taking on your loan on top of what they're already paying, then most banks wouldn't allow it.

How do student loans affect a mortgage applicaton?

Q) I have $60,000 in various student loans, but since consolidating my combined payment is only $300/month. I have no other debt. Do lenders view student loan debt differently due to the flexibility of the loans? Also, would they look more at the total amount of the debt or the monthly payment when determining the rate and loan amount?

A) With 20 years experience in the mortgage business, I have never seen a student loan that was in repayment treated any differently than any other long term debt. While you may be able to ask for a hardship deferal in the future, which is the only advantage on a student loan that doesn't exist on a standard installment loan, no lender wants to anticipate that circumstance. As long as the payments extend past 10 months in the future, the lender will only use your monthly payment as part of your qualifying ratios. The total debt is not that important and would only be a minor factor. What will matter more is your payment history on the student loan: it should be perfect. It all comes down to the quality of your credit history (your FICO score) and your qualifying ratios of debt/income.

How exactly do 'interest only' mortgage loans work? When do I pay on the principle of such a loan?

Q) I know APR loans are a bad idea, but how would an interest-only loan work? Would it still be a 30 year note, or do they extend the loan? Would I be able to get a fixed rate with an interest-only mortgage loan?

A) In an interest-only loan or mortgage the borrower only pays interest each month. This makes it cheaper than a conventional mortgage, in which part of each month's payment goes towards the principal and part goes towards interest. These loans have become popular because the monthly payments are lower, allowing borrowers to afford a larger home. However, these loans can be dangerous, especially in a down housing market. The interest rates are generally fixed for the first 1, 3 or 5 years. After that, they convert to a conventional loan, with a higher monthly payment. Most borrowers take on these loans because they assume they will sell the home before the interest rate increases. In a down market, they may not be able to sell. If they cannot afford the increased payment, they may have to default on the loan, and foreclose on the home. So, when the rate starts to adjust, you would need to refinance again. And, either get a fixed or another interest only adjustable. And, yes, I do believe you mean ARM. Although, if you have extra money every so often, you can pay down the principal in extra payments.

What kind of loan can I get to consolidate private student loans?

Q) I have $100,000 in private student loans from two lenders. The interest rate is over 10%. Is there a way to get another loan to pay this off at a lower interest rate? What kind of debt consolidation program should I consult? Most student loan companies only deal with Federal loans it seems. I keep seeing ads for mortgage loans with low monthly payments-- is there something similar I could get for a personal loan? THANKS!

A) You know what my answer to this problem is? I am joining the Marine Corps. I'm gonna be programming. There are plenty of different jobs in the Corps other than just killing ppl. So if I were you I'd go to marines.com and search for your nearest recruiter to see what they could do for you. What do you have to lose by talking to a recruiter. Nothing.

How do student loans work? Once I start paying them back, do I have to pay back consistently?

Q) Like if I have $1000 now gathered from working as a student for 2 years, can I use that to pay some of the loan back? Or, is it that once I start paying back loans, I can't stop, and I must consistently pay them back every month? Also, do student loans have minimum sums we are allowed to pay every month? Like can it be that i'm only allowed to pay if i'm paying in a minimum sum of $800 or $1000? P.S. this is not for me, so its not like I can look over a contract or anything like that.

A) It seems like everyone who answers on this subject just refer you to a website. Here's my knowledge so far on my son's student loan... He just got accepted for his first fiscal year in school and the fine print states that if you pay $1000 when your payment is only $250 (example), then your next payment wouldn't be due until after those other payments are paid from what was left of the $1000, meaning, you have an extra three months of payments paid from that money before you had to pay again. Make sense? But no matter if you overpay or pay monthly, you do need to make sure you pay on time, or it could affect your credit rating. I'm not sure what you're saying on your second part, but all loans have a minimum payment due each month, if that's what you're talking about. So what it comes down to is that you can always pay more than what you owe. No bank will turn down money early.

Student loans not in repayment or in deferral included in a mortgage loan application as an expense?

Q) Am applying for a mortgage loan and have two school loans already on my credit report but specify one is not in repayment and second is deferred. However, the loan application is requesting all expenses listed on my credit report. Are these loans not in repayment included in my expense ratio?

A) Student loans that are deferred...need to be deferred for 3yrs in order to take it out of the expense ratio. If not, I WOULD HIGHLY recommend that you find the original contract of the student loan. OTHERWISE, the underwriter will use his own calculations of what you will pay...which is USUALLY higher than you will normally pay.

What can u tell me about business loans to start up a new business?

Q) In the process of opening a new business. How do business loans work - I know I need a business plan etc before I can apply for a loan, but what's some other info? What's the interest rate range, what's the range of how many yrs u can have the loan, range of amnt they can loan, will they include the first yrs lease amnt in the loan if needed...etc, etc? We have good credit.

A) A true business credit card is a line of credit that is taken in the name of the business, under the business' credit. Activity, whether good or bad, is reflected on your business' credit report through D&B and other financial institutions, and the liability for any debts incurred and bills owed is with the business. However, some companies out there offer "business" credit cards which they require a person guarantee for. These institutions will often ask for a personal guarantee, and will almost always ask for a social security number from the person applying for the card. If this is the case, the credit card is not a business credit card, but is simply a personal credit card which is used for the business. The business is not liable for bills and debts - you are. When applying for a credit card for your business, watch out for areas asking for your SSN (and not your TaxID or EIN) and be wary of any credit card that asks for a personal guarantee. By ensuring that your credit card is in the name of your business, you can help to build your business' credit, while avoiding creating problems with your own. Many companies offer a list of credit cards that are issued under the business name only. Those lists typically run $300-$900, depending on the quality of the information inquiring. I would suggest starting your search online via google or yahoo. Search for "strong business credit" (just like that in quotes) to find services that sell the information. Good luck, Ilya Bodner Small Business Owner Initial Underwriting Group

Is it better to pay off student loans quickly?

Q) I'm graduating this June and I'm going to have about 30,000 canadian in student loans. I want to pay off my loans as quickly as I can even if it means sharing a room with someone. I'm planning to take at least 50% of my pay check to go into loans. So maybe around 900 a month, which allows me to pay off my loans in about 3 years. I'm normally a saver anyway and I can live cheaply. I would have just enough money left over for rent and living expenses. My rent would only be about 400 dollars. Plus, I have savings right now that would work as my emergency fund. Do you guys think that it's a good idea and is it worth it financially? My thought is that it would save me on interest even though it would be hard for a few years, but I will be much better off in the long run. Any suggestions?

A) Its always good to pay down debt Good Luck!!!

What types of loans are out thier for first time home owenrs with good credit?

Q) What types of loans are out thier for first time home owenrs with good credit? The place that I want to buy is about $185 can I still get a zero down loan? If not what is the next best thing?

A) JJ I would be very careful asking for help with your financials on this venue. What you are most likely to get are solictations, like you've already gotten. Do business with local lenders. Should something go wrong at least you can visit them to make sure they correct it. As for the actual question, FHA and USDA have good programs, the VA as well especially if you were wounded. Best of luck!

What to do when you run out of student loans?

Q) I am on my last year of Grad school and I run out of student loans. I had the federal loans and a citi-assist loan but my school is telling me that I maxed out on the amount of loans I can get (the full cost of attendance). What can I do? I see there are private student loan option but some say maximum is total cost of attendance... this means I am ineligible? what are my options?

A) No, it means all you can get is the total cost of tuition & books. Call a few of those companies & ask. Also, since you're in last year, ask mom, dad, aunt, whoever you can for a personal loan. Also, get a job. Waiting tables can be really good $$ for minimum hours put in. Dinner or cocktail only. There's no money in breakfast or lunch.