Give An Asset And Take A Loan

Give An Asset And Take A Loan

Give An Asset And Take a​ Loan
Credit cards have certainly become a​ necessity in​ this millennium .​
Walk into any store and you​ will find the​ sign,​ We accept credit cards,​ hanging at​ the​ door .​
Moreover,​ people in​ general are increasingly going the​ credit card way when they have to​ pay a​ variety of​ bills .​
In the​ old days,​ if​ someone wanted to​ buy a​ product on​ credit,​ some sellers made it​ a​ point to​ ask for security .​
This was the​ way in​ which they reassured themselves that the​ buyer would pay for the​ wares .​
Similarly,​ when we approach banks for personal loans,​ they have what is​ called secured loans wherein the​ borrower needs to​ offer property or​ some other kind of​ an​ asset as​ collateral .​
The bank will hold custody of​ the​ same for as​ long as​ the​ loan is​ being repaid .​
However,​ if​ the​ borrower fails to​ make the​ payment,​ the​ bank can either sell or​ auction the​ asset and recover the​ amount that had been loaned .​
This collateral is​ held as​ security by the​ bank till the​ loan duration is​ completed .​
The asset used as​ collateral is​ finally returned to​ the​ borrower upon clearance of​ the​ loan amount.
By offering a​ secured loan,​ the​ creditor is​ saved from unnecessary risk .​
At the​ same time,​ the​ borrower also realizes that he needs to​ keep up with the​ payments if​ he does not want his property to​ be lost .​
One very familiar loan type offered by banks is​ what is​ called a​ savings secured loan .​
This is​ a​ loan whereby the​ borrower is​ required to​ have an​ existing savings account with the​ bank and a​ portion of​ the​ funds in​ the​ account is​ used as​ collateral .​
Since he has been with the​ bank for a​ while,​ the​ banker knows of​ his credit standing and knows that the​ loan is​ covered .​
Once the​ loan is​ repaid,​ the​ portion held as​ collateral is​ relieved and given back to​ the​ borrower.
Another form of​ secured loan is​ the​ mortgage loan wherein the​ borrower has to​ put up his house or​ any property against the​ money that has been lent to​ him .​
If the​ person concerned has a​ good financial standing and is​ sure of​ being able to​ repay the​ loan,​ then he should opt for the​ secured loan as​ this offers the​ least risk and it​ may charge a​ lower amount of​ interest .​
In case he is​ not able to​ repay the​ borrowed amount,​ the​ bank will do a​ foreclosure .​
What this means is​ that the​ bank will take possession of​ the​ property and dispose of​ it​ in​ any way that it​ desires in​ order to​ obtain the​ money due to​ them .​
However,​ if​ a​ loan was secured whereby the​ borrower bought a​ vehicle or​ property,​ the​ bank has the​ right to​ repossess the​ same in​ order to​ get back the​ loan amount.
These are just two of​ the​ various kinds of​ secured loans that are available in​ today's markets .​
The astute loan seeker would have to​ do some extensive looking around if​ he wishes to​ find loans that are among the​ cheapest in​ the​ market.

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