Editor’s Note: This is a guest article from Felicia Christina
Numerous different types of loans are offered by various banks. These loans are made with certain regulations and laws by which the bank is governed.
Among the different kinds of loans present we can select one that matches our needs and one that we are eligible to apply for. Also another vital factor that needs to be considered is the interest rate offered by the bank. These can either be fixed rate or could be adjusted according to several factors.If you go select the variable interest rate option, this will change constantly with the market’s current rate.Interest rates of bank loans may be influenced by various factors. Inflation is one such factor. If inflation rise is small, interest rates will hike by a small margin. On the other hand, if the rise is very high, interest rates will be raised significantly.A banking loan may even be secured over the internet. The process is whole lot easier and faster compared to get it done through an official at the bank. Also this enables the individual to compare the interest rates offered by different banks. However one must be careful in safeguarding oneself from becoming prey to Internet fraud.People could also make use of certain schemes offered by banks at particular time periods.A bank loan may be applied for various different reasons such as buying a home, vehicle, educational purposes, starting businesses etc.Let’s have a look at the general categories of loans:
Secured loans:Secured loans are given in exchange of an asset of the customer that he places as his security.If the customer is unable to pay back the loan the bank will claim ownership of the asset that was used as security for the loan.Bankers never give loans that exceed the property’s total value. Usually only 60-80% of the property’s total value is given.
This category of loans do not ask for security and therefore are not commonly found for people who want to start a business. This is because the banker is ignorant of the client’s economic history and is therefore taking a high risk. However for individuals with good credit histories, these loans may get approved.
Individuals may then select a loan from the different types of business loan listed below.
* Loan to start business: These can be utilized to start a business. These are offered depending on the individual’s business type and these loans were the banks major source of income in the past.
* Mortgage banking loans: This kind of loan is given to people for the purpose of building a house or for the renovation of their current house. The conditions for this type of loan is different in each bank.
* Loans for automobiles: These are offered to individuals having their very own automobiles.
* Loans for students: These help students finish off their education and various packages are offered by different banks.
*Loans for personal reasons: These fall under the unsecured loans category and will be offered in amounts not exceeding Five Thousand Dollars.
Another category of funds is the “Close ended funds” and may also be known as “financial sureties.” They are found in the stock market and are traded for stock exchange. Their share prices are determined according to people who invest in them and not by “Net Asset Value” or NAV. These shares are handled by an individual who manages funds. The sponsor with the aid of underwriting, supply funds to be invested for a specific purpose.
These shares cannot be bought by posting checks. Like stocks, close ended funds must be purchased from a market that is open and the most suitable time to invest in them is as soon as they are made available in the stock market. So now let’s take a look at the advantages and risks in obtaining close ended funds.Clearly the advantages are the fact that people can benefit from its discounted rate which is worked out by obtaining the difference of the fund value and NAV.Also, people intending to purchase stock can buy them off at discounted rates and good quality.
Then what are the risks associated with close ended funds?
These funds are liable to change drastically within short periods of time and they are of a constantly changing nature. Further the discounts may drop down to real low values that even their owner may be unable to give its real value.