see also: lending to Brazilian companies
Related trends in 2008:
deleveraging of financial markets 2008 : In response to the bursting of the housing bubble, and the following credit crisis of 2007, we are seeing credit (lending, borrowing) contract significantly in the USA, Europe, and in many other markets. This is leading to fears of a Possible recession in 2008. At least when looking at the US in isolation, it looks possible that the US could slip into recession this coming year. but, considering all of the global linkages (see trends below), it is possible, that the US housing slump / credit crisis / recession could drag other countries down as well. But, as in any economic state, there will be opportunities (as well as challenges). In this section, we will look at possible connections (linkages) between a potential US slowdown, and what that means for global investors. The big question is... how would a USA recession effect Latin America
Bank loans for a business
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 assets over time, between the lender and the 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.
Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding. Bank loans and credit are one way to increase the money supply.
Types
Secured
A mortgage 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 defaults 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 on the car, in much the same way as a mortgage above, although the duration of the loan period is considerably shorter, quite often corresponding to the useful life of the car. Where this is not, it will be another form of consumer credit.
Unsecured
These may be available from financial institutions under many different guises or marketing packages:
* credit card debt,
* personal loans,
* bank overdrafts
* credit facilities or lines of credit
* corporate bonds
The interest rates 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
Abuse in the granting of loans is known as predatory lending. 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.
Credit card companies in some countries have been accused by consumer organisations of lending at usurous interest rates
See also
* Finance, Personal finance
* Debt, Consumer debt, Debt consolidation, Government debt
* Bank, Fractional-reserve banking, Building society
* George D. Sax and the Exchange National Bank of Chicago - Innovation of instant loans
* Interest-only loan
* student loan
* Annual percentage rate (a.k.a. Equivalent Annual Rate)
* Payday loan
* Refund Anticipation Loan
* College Consolidation Loan
* Perkins Loan
* Stafford loan
* FAFSA
Business Models
Lending Tree
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