The financial world, in a nutshell is just like any other ethnic group, gang or social group. It has its own language. Words, terms, statements that to everyday people think they have a solid grasp of but in truth actually confuses them. Types of loans, commissions, types of interest rates, bankruptcy terms; the list goes on and though hard to understand at times, as regular everyday people we have to try to understand the bare essence of the financial world language, since majority of regular everyday people will never ever steer clear of these terms since everyone encounter financial problems on an everyday basis. To begin with there are the type of loans which regular citizens, entrepreneurs or even corporations patronize.
These types of loans are:
- Secured Loans – These are asset based loans, in which collateral is offered until the borrower has paid off his loan. A mortgage loan is one type of secured loan another is an auto or car loan. It is a type of loan that the lender (bank or any other financial lender) takes control of the papers of the items purchased with the loan until the borrower makes good or pays off the loan. In the event that the borrower cannot pay off the loan the lender will sell of the contract and item to make good off the loan in question.
- Unsecured Loans – As the word unsecured implies, the loan is not tied with any of the borrower’s assets. Usually with a slightly higher interest rate since in the event that the borrower will not be able to make good on their payment obligations, the financial institutions act of recourse is very much limited. Usually these unsecured loans come in the form of credit cards, personal loans even peer to peer loans.
- credit card are credit lines usually attached to financial institutions that gives the borrower power of purchase by lending it name via card to the borrower in which the borrower can make payments in installment or in full with or without overcharge depending on the terms and conditions of credit.
- Personal Loans are loans that are taken from banks in the form of lump sum that has a specific rate and loan duration in which the borrower has to make good on. These are usually loans that charge premiums on over-payments and underpayments.
- Peer to peer are the type of loans that exchange hands either from one individual to another, or a corporation to another corporation in which loan rates depends specifically on the contract signed by the lender and the borrower.
In truth there are a lot more financial words to define and statements to breakdown in order to at least get a grasp of how the financial world communicates in written, verbally and also legally. An overview just to be able to understand the bare essence the types of loans we encounter on a daily basis in a short period of time we cannot force ourselves to understand the financial world overnight, to understand It will always take time as if learning a second language.