A Loan (lainaa) Can Fulfill All Your Desires A loan (lainaa) is a debt where two parties are present. A borrower who borrows the money and the lender lends the same. The amount of money involved in the transaction is called principal and the borrower has to repay back the amount to the lender after a certain point of time along with interest. These repayments can be done periodically like monthly, quarterly or yearly. The interest as specified above is an income during which the money remains blocked. A contract is required where both the parties must sign all documents before agreeing to pay and receive the money. In case there is a slight mistake in the information provided in the contract details, various problems may occur and finally the same may even be terminated. This debt instrument is provided by various classes of person. Individuals, banks, financial institutions, business houses, partnership firms, etc. are all liable to take or give loans. It is better to know all the details of the lender before entering into a contract. There are numerous fraud institutions which create false contract papers and bills and the borrower is troubled in the end. So let us understand the different types of loan which are available in the market. Broadly there are two types â€“ Secured and Unsecured. In case of the former, the borrower places some collateral securities such as house, car or land and borrows money. The later are loans without collateral (lainaa ilman vakuuksia). There is another type called mortgage. This variety is mostly related to housing projects. The security involved is a house property. Repossession of the house is done in case of default. These types of credits are applicable for different assets. You can use them for purchasing a house, car, gold or even jewelry. Sometimes these are issued against term deposits in banks as well. The duration varies as per the purchase of the asset. For e.g., there are two varieties of auto loans. The first one is direct and the second indirect. The bank transfers the money directly to the customer in the first case whereas the same acts as an intermediary between the customer and car dealership in the second case. The other most important type of advance is unsecured. In this type, the money is offered to the borrower without any security and thus remains risky. Some of the unsecured credits are credit card debt, bank overdrafts, lines of credit, personal loans, bonds, etc. As these are not secured, the interest rates are different and are applicable as per the contract between the parties. In most cases it is seen that these are not regulated by any law. Also the borrower may not be able to sue the lender in case a problem arises and the same occurs for the other party as well. In case of high risk, there is a chance of default too. A credit remains very much useful for acquiring an asset these days but one should be careful while utilizing it.
Published on Jul 16, 2012
A loan (lainaa) is a debt where two parties are present. A borrower who borrows the money and the lender lends the same.