Finance is the science of funds management.

[1] The general areas of finance are business finance, personal finance, and public finance.[2] Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money and risk and how they are interrelated. It also deals with how money is spent and udgeted. Finance works most asically through individuals and usiness organi!ations depositing money in a ank. The ank then lends the money out to other individuals or corporations for consumption or investment, and charges interest on the loans. "oans have ecome increasingly packaged for resale, meaning that an investor uys the loan #de t$ from a ank or directly from a corporation. %onds are de t sold directly to investors from corporations, while that investor can then hold the de t and collect the interest or sell the de t on a secondary market. %anks are the main facilitators of funding through the provision of credit, although private e&uity, mutual funds, hedge funds, and other organi!ations have ecome important as they invest in various forms of de t. Financial assets, known as investments, are financially managed with careful attention to financial risk management to control financial risk. Financial instruments allow many forms of securiti!ed assets to e traded on securities e'changes such as stock e'changes, including de t such as onds as well as e&uity in pu licly( traded corporations.[dubious discuss] )entral anks act as lenders of last resort and control the money supply, which affects the interest rates charged. *s money supply increases, interest rates decrease. [+] Finance is the set of activities dealing with the management of funds. ,ore specifically, it is the decision of collection and use of funds. It is a ranch of economics that studies the management of money and other assets. Finance is also the science and art of determining if the funds of an organi!ation are eing used properly. Through financial analysis, companies and usinesses can take decisions and corrective actions towards the sources of income and the e'penses and investments that need to e made in order to stay competitive. FINANCE IS THE LIFEBLOOD OF BUSINESS Finance is the concept of managing money. ,ost peoples personal finances really suck right now due to the economy. -ery few can pay their ills, orrow money much less save right now. Finance . the system that includes the circulation of money, the granting of credit, the making of investments, and the provision of anking facilities . the science or study of the management of funds http://www.merriam-webster.com/cgi-bin/dictionary?book=Dictionary&va=finance

The field of finance refers to the concepts of time, money and risk and how they are interrelated. The term /finance/ may thus incorporate any of the following. The study of money and other assets The management and control of those assets 0rofiling and managing pro1ect risks The science of managing money The industry that delivers financial services *s a ver , /to finance/ is to provide funds for usiness or for an individual2s large purchases #car, home, etc.$. http://en.wikipedia.org/wiki/Finance

Different Finance types explained

The Drive Team, drive.com.au, March 28, 2007

Analysis of Decision problems involving the allocation of resources over time In a world of uncertainty Usually in the context of Decisions made by firms Investors Etc.

Page 1 of 2 | Single Page Lease or loan !hattel or cash "nderstandin# the different types of car finance $ill save you money in the lon# run. !%&'(&T)%&*L L%*& The easiest way to get car finance is to go to a bank or finance company and take out a loan, which is usually secured against the vehicle itself. ost loans from finance companies must be paid off over two to five years, although banks offer personal loans that can be repaid over a longer period. !utomotive loans are generally set at a fi"ed interest rate, which simplifies budgeting for repayments. #ne of the biggest factors behind the record sales of new cars has been the low interest rate environment and the ability of consumers to borrow against the e$uity in their homes to buy new cars. +(,-%&*L L(*-( ! personal lease basically means you rent the car for a given period %usually one to five years& and make monthly repayments as you would when you are renting a house. The big difference is that at the end of the agreed rental period, the car may be sold or, in some cases, the finance company may take it back and sell it as a used car.

The personal lease is generally used by people who will use their car for private or household use more than '( per cent of the time, although some ta" deductions may be available if the vehicle is also used for business purposes. .),( +",!.*-( The hire purchase option is often used by small businesses because of the fle"ibility it offers. !s with a lease you are obligated to buy the car by making a final payment at the end of the agreed hire purchase period. This payment is known as the balloon payment. The hire purchase option gives a business the ability to arrange the deal in such a way that the monthly repayments are suitable for the business)s cash*flow and budget + by increasing the si,e of the deposit or balloon payment, the monthly payments can be made smaller. This is handy for businesses that are starting up and have a lot of different calls on their cash*flow. some ta" deductions may be available for depreciation and interest charges. %+(,*T)&/ L(*-( This is the best option for the business that runs its vehicles hard and turns them over fre$uently, such as a company with sales representatives or delivery vehicles that are constantly on the road. -nder an operating lease, the financing company retains ownership of the vehicle and provides the customer with e"clusive use of the vehicle for one to five years in return for lease rental payments + .ust like a long*term hire car. / back to previous

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Different Finance types explained
The Drive Team, drive.com.au, March 28, 2007

Page 2 of 2 | Single Page Lease or loan !hattel or cash "nderstandin# the different types of car finance $ill save you money in the lon# run. 0mportantly, the user does not have to worry about the residual value at the end of the lease and the finance company bears the risk of losing money on the resale of the vehicle. #perating leases will not show up as assets on the balance sheet, so vehicle borrowing costs will not affect gearing levels. 0n addition, lease payments are fully ta"*deductible, e"cept for lu"ury vehicles. !.*TT(L M%,T/*/( This financing option suits businesses that account for their operations on a cash basis.0t works the same as a hire purchase agreement1 the customer makes a series of monthly payments, then a final balloon payment. 0t also offers a great deal of fle"ibility, because the buyer is able to set the length of the lease payment and ad.ust the monthly repayments by increasing or decreasing the amount paid as a deposit or balloon payment.

-nder a hire purchase agreement, businesses are allowed to claim back some or all of the 2ST contained in the price of the vehicle. 3ut where a business that uses an accrual accounting system can claim the 2ST back in one 3usiness !ctivity Statement, businesses that use a cash accounting system must claim the 2ST over the full term of the finance contract. This can create cash*flow problems and adds to a company)s administrative burden. 3ut the ta" office has ruled that using a chattel mortgage allows a cash business to claim the 2ST back in one hit. !ndrew 2ibson, general manager of sales and marketing for 3 4 5inancial Services, says1 60t)s come to the fore because of the cashflow benefits for traders.7 %T.(, %+T)%&5inancing companies have e"panded their product offerings in the past few years, and many of the 8uropean mar$ues + including 9olkswagen, :aimler;hrysler and 3 4 + follow the e"ample set by their parent companies, which often offer customers a complete range of banking and financial services products. 0n !ustralia, automotive financing companies offer products including insurance, fleet management, maintenance, fuel cards and even credit cards. Page 2 of 2 | Single Page
Overdraft * popular form of finance ecause it has the advantages of availa ility, convenience and fle'i ility. 3owever, ecause interest rates are high, it should only e used for short(term re&uirements such as funding working capital. Find out more a out 4verdraft. Bank term loans These provide fi'ed(term finance for longer periods. They are often secured y a charge against company assets and re&uire you to sign legally inding covenants. Find out more a out our "oans and Finance products Asset- ased finance This descri es financing an asset over its estimated life span using the asset as security for the loan. It can e structured so that the orrower has the sole right to use the asset and ownership transfers to the orrower at the end of the loan period. Find out more a out our *sset Finance products !eceiva les Finance This form of finance uses outstanding customer invoices as security. Find out more a out 5eceiva les Finance. Invoice disco"ntin# 6imilar to 5eceiva les Finance, this is usually only offered to larger companies with strong credit management systems. An#el f"ndin# *n individual invests in a company in return for shares in the company. $ent"re ca%ital There are organisations that specialise in investing in un&uoted companies which they elieve will offer high returns to investors. There is strong competition for this type of finance and you should only consider it after assessing all the alternatives. &ersonal reso"rces These include personal savings, money orrowed from family and friends, or profits generated y the usiness.

Need for Financial Statement Anal'sis

Financial statement analysis is used to identify the trends and relationships between financial statement items. 3oth internal management and e"ternal users %such as analysts, creditors, and investors& of the financial statements need to evaluate a company<s profitability, li$uidity, and solvency. The most common methods used for financial statement analysis are trend analysis, common*si,e statements, and ratio analysis. These methods include calculations and comparisons of the results to historical company data, competitors, or industry averages to determine the relative strength and performance of the company being analy,ed.

()at *o" Need To +no, A o"t Financial Statements

' !ic)ard Lot) #)ontact *uthor 7 %iography$
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9nowing how to work with the num ers in a company2s financial statements is an essential skill for stock investors. The meaningful interpretation and analysis of alance sheets, income statements and cash flow statements to discern a company2s investment &ualities is the asis for smart investment choices. 3owever, the diversity of financial reporting re&uires that we first ecome familiar with certain general financial statement characteristics efore focusing on individual corporate financials. In this article, we2ll show you what the financial statements have to offer and how to use them to your advantage.

Financial Statements are Scorecards There are millions of individual investors worldwide, and while a large percentage of these investors have chosen mutual funds as the vehicle of choice for their investing activities, a very large percentage of individual investors are also investing directly in stocks. 0rudent investing practices dictate that we seek out &uality companies with strong alance sheets, solid earnings and positive cash flows.

:hether you2re a do(it(yourself or rely on guidance from an investment professional, learning certain fundamental financial statement analysis skills can e very useful ( it2s certainly not 1ust for the e'perts. 4ver thirty years ago, usinessman 5o ert Follet wrote a wonderful little ook entitled /3ow To 9eep 6core In %usiness/ #1;<=$. 3is principal point was that in usiness you keep score with dollars, and the scorecard is a financial statement. 3e recogni!ed that /a lot of people don2t understand keeping score in usiness. They get mi'ed up a out profits, assets, cash flow and return on investment./ The same thing could e said today a out a large portion of the investing pu lic, especially when it comes to identifying investment values in financial statements. %ut don2t let this intimidate you> it can e done. *s ,ichael ). Thomsett says in /,astering Fundamental *nalysis/ #1;;<$. /That there is no secret is the iggest secret of :all 6treet ( and of any speciali!ed industry. -ery little in the financial world is so comple' that you cannot grasp it. The fundamentals ( as their name implies ( are asic and relatively uncomplicated. The only factor complicating financial information is 1argon, overly comple' statistical analysis and comple' formulas that don2t convey information any etter than straight talk./ #For more information, see Introduction To Fundamental Analysis and What Are Fundamentals?$ :hat follows is a rief discussion of twelve common financial statement characteristics to keep in mind efore you start your analytical 1ourney. ()at Financial Statements To Use For investment analysis purposes, the financial statements that are used are the alance sheet, the income statement and the cash flow statement. The statements of shareholders2 e&uity and retained earnings, which are seldom presented, contain nice(to(know, ut not critical, information, and are not used y financial analysts. * word of caution. there are those in the general investing pu lic who tend to focus on 1ust the income statement and the alance sheet, there y relegating cash flow considerations to somewhat of a secondary status. That2s a mistake> for now, simply make a permanent mental note that the cash flow statement contains critically important analytical data. #To learn more, check out Reading The Balance Sheet, Understanding The Income Statement and The Essentials ! "ash Flo#.$ +no,in# ()at-s Be)ind t)e N"m ers The num ers in a company2s financials reflect real world events. These num ers and the financial ratios?indicators that are derived from them for investment analysis are easier to understand if you can visuali!e the underlying realities of this essentially &uantitativeinformation. For e'ample, efore you start crunching num ers, have an understanding of what the company does, its products and?or services, and the industry in which it operates. T)e Diversit' of Financial !e%ortin# @on2t e'pect financial statements to fit into a single mold. ,any articles and ooks on financial statement analysis take a one(si!e(fits(all approach. The less(e'perienced investor is going to get lost when he or she encounters a presentation of accounts that falls outside the mainstream or so(called /typical/ company. 6imply remem er that the diverse nature of usiness activities results in a diversity of financial statement presentations. This is particularly true of the alance sheet> the income and cash flow statements are less suscepti le to this phenomenon. T)e C)allen#e of Understandin# Financial .ar#on The lack of any apprecia le standardi!ation of financial reporting terminology complicates the understanding of many financial statement account entries. This circumstance can e confusing for the eginning investor. There2s little hope that things will change on this issue in the foreseea le future, ut a good financial dictionary can help considera ly. Acco"ntin# is an Art/ Not a Science The presentation of a company2s financial position, as portrayed in its financial statements, is

influenced y management estimates and 1udgments. In the est of circumstances, management is scrupulously honest and candid, while the outside auditors are demanding, strict and uncompromising. :hatever the case, the imprecision that can e inherently found in the accounting process means that the prudent investor should take an in&uiring and skeptical approach toward financial statement analysis. #For related content, see $on%t Forget To Read The &ros'ectus( and )o# To Read Footnotes * &art +, E-aluating Accounting Ris. .$ T,o +e' Acco"ntin# Conventions Aenerally accepted accounting principles #A**0$ are used to prepare financial statements. The sum total of these accounting concepts and assumptions is huge. For investors, a asic understanding of at least two of these conventions ( historical cost and accrual accounting ( is particularly important. *ccording to A**0, assets are valued at their purchase price #historical cost$, which may e significantly different than their current market value. 5evenues are recorded when goods or services are delivered and e'penses recorded when incurred. Aenerally, this flow does not coincide with the actual receipt and dis ursement of cash, which is why the cash flow ecomes so important. Non-Financial Statement Information Information on the state of the economy, industry and competitive considerations, market forces, technological change, and the &uality of management and the workforce are not directly reflected in a company2s financial statements. Investors need to recogni!e that financial statement insights are ut one piece, al eit an important one, of the larger investment information pu!!le. Financial !atios and Indicators The a solute num ers in financial statements are of little value for investment analysis, which must transform these num ers into meaningful relationships to 1udge a company2s financial performance and condition. The resulting ratios and indicators must e viewed over e'tended periods to reflect trends. 3ere again, eware of the one(si!e(fits(all syndrome. 8valuative financial metrics can differ significantly y industry, company si!e and stage of development. Notes to t)e Financial Statements It is difficult for financial statement num ers to provide the disclosure re&uired y regulatory authorities. 0rofessional analysts universally agree that a thorough understanding of the notes to financial statements is essential in order to properly evaluate a company2s financial condition and performance. *s noted y auditors on financial statements /the accompanying notes are an integral part of these financial statements./ Take these noted comments seriously. #For more insight, see Footnotes, Start Reading The Fine &rint.$ T)e A"ditor-s !e%ort 0rudent investors should only consider investing in companies with audited financial statements, which are a re&uirement for all pu licly traded companies. %efore digging into a company2s financials, the first thing to do is read the auditor2s report. * /clean opinion/ provides you with a green light to proceed. Bualifying remarks may e enign or serious> in the case of the latter, you may not want to proceed. Consolidated Financial Statements Aenerally, the word /consolidated/ appears in the title of a financial statement, as in aconsolidated alance sheet. )onsolidation of a parent company and its ma1ority(owned #more that CDE ownership or /effective control/$ su sidiaries means that the com ined activities of separate legal entities are e'pressed as one economic unit. The presumption is that a consolidation as one entity is more meaningful than separate statements for different entities. The financial statement perspectives provided in this overview are meant to give readers the ig picture. :ith these considerations in mind, eginning investors should e etter prepared to cope with learning the analytical details of discerning the investment &ualities reflected in a company2s financials.

Financial statements #or financial re%orts$ are formal records of the financial activities of a usiness, person, or other entity. In %ritish 8nglish, including Fnited 9ingdom company law, financial statements are often referred to as acco"nts, although the term financial statements is also used, particularly y accountants. Financial statements provide an overview of a usiness or person2s financial condition in oth short and long term. *ll the relevant financial information of a usiness enterprise, presented in a structured manner and in a form easy to understand, are called the financial statements. There are four asic financial statements.[1] 1. Balance s)eet. also referred to as statement of financial position or condition, reports on a company2s assets, lia ilities, and 4wnership e&uity at a given point in time. 2. Income statement. also referred to as 0rofit and "oss statement #or a /0G"/$, reports on a company2s income, e'penses, and profits over a period of time.0rofit G "oss account provide information on the operation of the enterprise. These include sale and the various e'penses incurred during the processing state. +. Statement of retained earnin#s. e'plains the changes in a company2s retained earnings over the reporting period.

. Statement of cas) flo,s. reports on a company2s cash flow activities, particularly its
operating, investing and financing activities. For large corporations, these statements are often comple' and may include an e'tensive set of notes to the financial statements and management discussion and analysis. The notes typically descri e each item on the alance sheet, income statement and cash flow statement in further detail. Hotes to financial statements are considered an integral part of the financial statements.

Loans And The Meaning Of Them

A oan is a debt that is !s!a y re"!ired to be repaid. #here is a borrower and a ender invo ved in the oan and most often the oan is repaid with interest. $oans have evo ved over the years ike any good ind!stry wo! d.

$et%s take a ook at the different types of oans and the termino ogy invo ved in getting a oan.

oans are created based on the Ann!a &ercentage 'ate or A&' for short. #his is the interest

rate that wi be paid on a oan. A&' makes it easier for cons!mers to compare enders and their oan options. (nterest and fees are how enders make their money.

)hen a oan is created it becomes debt to the borrower. Debt is something that is owed. A debt is !s!a y granted with the borrower e*pected to pay it back p !s interest. #here are many different types of debts+ b!t in this artic e we want to ook at oans.

#oday there are main y two types of oans+ sec!red and !nsec!red. A sec!red oan is most c ose y associated with a mortgage oan. #he ender is oaning money to b!y the home with the home itse f as sec!rity for the oan. (f the borrower defa! ts the mortgage ender can forec ose on the home and !se the proceeds to pay back the oan.

,ar oans can be sec!red oans as we . #his is known as a tit e oan. As ong as the payments are on time the oan is fine. -nce the borrower begins to defa! t on their payments the a!to ender may reposes the car and se it to pay off the oan. .ince the ender owns the tit e they have sec!rity in the a!tomobi e and can do this.

An !nsec!red oan is defined as a oan that is not backed by any co atera . An !nsec!red oan is a greater risk to the ender and genera y re"!ires better credit to receive. .ome !nsec!red oans wi re"!ire a co-signer who is responsib e to pay for the oan if the borrower does not make the payments.

,redit ,ards are a type of !nsec!red oans and are revo ving charges where interest is charged if the f! ba ance is not paid off each month.

.t!dent oans are another type of oan. .t!dent oans are oans offered to st!dents to assist in payment of the costs of professiona ed!cation. #hese oans !s!a y carry ower interests than other oans and are !s!a y iss!ed by the government.

-ften they are s!pp emented by st!dent grants which do not have to be repaid. /eca!se of the high cost of co ege+ and trade schoo s most st!dents can "!a ify easier for a st!dent oan or a parent oan to he p pay it back.

#he Free App ication for Federa .t!dent Aid is known as FAF.A. #his is a form that can be fi ed o!t every year by st!dents 0both !ndergrad!ate and grad!ate1 and their parents to determine their e igibi ity for federa st!dent financia aid. (n addition+ most states and schoo s !se information from the FAF.A to award non-federa aid.

#he FAF.A consists of n!mero!s "!estions regarding the st!dent%s finances+ as we as those of his or her fami y to determine how m!ch they wi "!a ify for.

A ong the ines of st!dent oans are .tafford $oans. A .tafford $oan is a st!dent oan offered to st!dents enro ed in American instit!tions of higher ed!cation to he p finance their ed!cation. #he oans are offered !nder #it e (2 of the 3igher 4d!cation Act of 5678 0with s!bse"!ent amendments1 and are therefore g!aranteed by the 9... Department of 4d!cation either direct y or thro!gh g!arantee agencies.

(n 56::+ ,ongress renamed the Federa ;!aranteed .t!dent $oan program the 'obert #. .tafford .t!dent $oan program+ in honor of .enator 'obert .tafford of 2ermont+ for his work on higher ed!cation.

Another oan that is gaining in pop! arity and credibi ity is a payday oan. A payday oan or paycheck advance is a sma + short-term oan that he ps who is in need of cash before payday.

&ayday oans are a so sometimes referred to as cash advances+ and do not re"!ire good credit to get as ong as yo! have a checking acco!nt and verifiab e income.

<any payday borrowers may not ab e to repay their oans oan in f! at their first paycheck. #his eads to oan f ipping+ which is the practice of renewing a oan at mat!rity by paying additiona fees witho!t red!cing the ba ance owed.

&awnbrokers are wi ing to end money on the va !e of something. /efore payday oans peop e who needed money wo! d take something to a pawnshop and trade it for a sma amo!nt of money ess the fee the pawnbroker kept. )hen yo! were wi ing to repay the pawnbroker yo! wo! d get yo!r item back.

<any pawnshops are f! of items that have never been paid back. #he pawnshop can se these and make more money.

#his is a few different types of oans and the termino ogy associated with them. ;etting a oan today is easier than in the past beca!se of the many different types of oans and enders avai ab e to cater to every type of c!stomer.

* loan is a type of de t. "ike all de t instruments, a loan entails the redistri ution of financial assets over time, etween the and the . en.wikipedia.org?wiki?"oans loan ( the temporary provision of money #usually at interest$ loan ( lend. give temporarily> let have for a limited time> /I will lend you my car/> /loan me some money/ loan ( loanword. a word orrowed from another language> e.g. I lit!2 is a Aerman word orrowed into modern 8nglish wordnetwe .princeton.edu?perl?we wn "oan ( In association foot all, a loan involves a particular player eing allowed to temporarily play for a clu other than the one he is currently ... en.wikipedia.org?wiki?"oanJ#associationJfoot all$ loan ( * sum of money or other valua les or consideration which an individual, group or other legal entity orrows from another individual, group or legal entity #the latter often eing a financial institution$ with the condition that it e returned or repaid at a later date #sometimes with interest ... en.wiktionary.org?wiki?loan *ny program descri ed as a loan re&uires repayment, usually with interest, to the source of the funding. "oans often come from the institution or private lender. Aenerally, the greater the financial need, the larger the loan. ... www.nacacnet.org?0u lications5esources?steps?*rticles?0ages?Fin*idTer ms.asp' Financial assistance that must e repaid. www.gprc.a .ca?a out?glossary? 3ousing loans to veterans y anks, savings and loans, or other lenders that are guaranteed y the -eterans *dministration, ena ling veterans to

uy a residence with little or no down payment. www.lighthousea stract.com?glossary.html loan ( money lent at interest. * lender makes a /loan/ with the idea that it will e paid ack as agreed and that interest will e paid for the use of the money. www.small i!.nsw.gov.au?small usiness?5esources?%usinessKTools?Alos saryKofK%usinessKTerms? loan ( * form of financing where y you orrow money to purchase a vehicle. www.wachoviadealer.com?)onsumers?)ustomer6ervice?*uto"oanAlossar y?default.asp loan ( ,oney orrowed from a lending institution or the @epartment that must e repaid. https.??loanconsolidation.ed.gov?appstatus?help?glossary.shtml loan ( :hen a lender gives money or property to a orrower, and the orrower agrees to return the property or repay the orrowed money along with interest, at a predetermined date in the future. investors.div'.com?glossary.cfm * loan is when a person orrows money from a financial institution or other type of lender with an agreement to pay ack the full amount plus interest over a period of time. "oans are usually guaranteed with assets like a vehicle or home. ... www.carfa'.com?@efinitions?Alossary.cfm * LD1#k$ loan is taken from a LD1#k$ retirement account. )ertain plans allow an individual to withdraw a percentage of an account alance, with set minimum and ma'imum amounts allows. The loan is generally paid ack, with interest, through payroll deductions. ... www.sho e.com?2D1M;2;L2C.html

Student loans are financial aid, along with grants, scholarships, and work*study. Student loans are borrowed money that must be repaid, with interest, .ust like car loans and mortgages. 8ven with other types of aid, many students have to rely on borrowing a loan to help cover their education e"penses. ost students do not receive enough grant and scholarship funding to cover their college e"penses. !ppro"imately, 001 of financial aid fundin# in the state of Te"as comes from education loans. 8ducation loans from different sources have varying terms %e.g., interest rates, repayment plans, fees, and credit worthiness re$uirements&. 5or e"ample, federal Stafford and Perkins loans have no credit worthiness or cosigner re$uirements and the interest rates are generally lower than other types of loans. 4here as, P=-S loans re$uire good credit and have higher interest rates.

* loan is a type of de t. "ike all de t instruments, a loan entails the redistri ution of financial assets over time, etween the lender and the orrower. In a loan, the orrower initially receives or borro#s an amount of money, called the 'rinci'al, from the lender, and is o ligated to 'ay bac. or re'ay an e&ual amount of money to the lender at a later time. Typically, the money is paid ack in regular installments, or partial repayments> in an annuity, each installment is the same amount. The loan is generally provided at a cost,

referred to as interest on the de t, which provides an incentive for the lender to engage in the loan. In a legal loan, each of these o ligations and restrictions is enforced y contract, which can also place the orrower under additional restrictions known as loan covenants. *lthough this article focuses on monetary loans, in practice any material o 1ect might e lent. *cting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of de t contracts such as onds is a typical source of funding.
Contents
!hide"

# $ypes of loans

o o o

#.# %ecured #.& Unsecured #.' Demand & (oan payment ' Abuses in lending United %tates taxes ) Income from discharge of

indebtedness * %ee also + ,eferences

0edit1T'%es

of loans

0edit1Sec"red * secured loan is a loan in which the orrower pledges some asset #e.g. a car or property$ as collateral for the loan. * mortgage loan is a very common type of de t instrument, used y many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security N a lien on the title to the house N until the mortgage is paid off in full. If the orrower defaults on the loan, the ank 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 e secured y the car, in much the same way as a mortgage is secured y housing. The duration of the loan period is considera ly shorter N often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. * direct auto loan is where a ank gives the loan directly to a

consumer. *n indirect auto loan is where a car dealership acts as an intermediary etween the ank or financial institution and the consumer. * type of loan especially used in limited partnership agreements is the recourse note. * stock hedge loan is a special type of securities lending where y the stock of a orrower is hedged y the lender against loss, using options or otherhedging strategies to reduce lender risk.
[citation needed ]

* pre(settlement loan is a non(recourse de t, this is when a monetary loan is given ased on the merit and awarda le amount in a lawsuit case. 4nly certain types of lawsuit cases are eligi le for a pre(settlement loan.[citation needed] This is considered a secured non(recourse de t due to the fact if the case reaches a verdict in favor of the defendant the loan is forgiven. 0edit1Unsec"red Fnsecured loans are monetary loans that are not secured against the orrower2s assets. These may e availa le from financial institutions under many different guises or marketing packages. credit card de t personal loans ank overdrafts credit facilities or lines of credit corporate onds

The interest rates applica le to these different forms may vary depending on the lender and the orrower. These may or may not e regulated y law. In the Fnited 9ingdom, when applied to individuals, these may come under the )onsumer )redit *ct 1;=L. 0edit1Demand @emand loans are short term loans that are atypical in that they do not have fi'ed dates for repayment and carry a floating interest rate which varies according to the prime rate. They can e /called/ for repayment y the lending institution at any time. @emand loans may e unsecured or secured.[1]

The History of Home Loans

Contributor

/y =essica Anne 4 i>abeth eHow Contributing Writer

Artic e 'ating: 0? 'atings1

3ome oans are !s!a y the argest oans that cons!mers wi ever make. /eca!se of this+ it is important to know how home oans started+ the different types of home oans and the simi arities and differences between them. (n this way+ cons!mers can make the best decision on which oan is the best for their p!rposes. 4mai &rint Artic e Add to Favorites F ag Artic e

5.

History: Fannie Mae and Freddie Mac

For many years+ the on y way in which to obtain money to p!rchase a home was to app y for a conventiona home oan. #his type of oan was obtained thro!gh a bank+ credit !nion or other private+ non-government-affi iated financia instit!tion. (n 56@:+ the Federa Aationa <ortgage Association+ better known as BFannie <ae+B was created and estab ished as a federa agency by then-&resident Frank in 'ooseve t as part of his Aew Dea . (t made it possib e+ even d!ring a time when most peop e were o!t of work and had itt e+ if any+ income to sti be ab e to afford a home. (n 56C?+ the Federa 3ome $oan <ortgage ,orporation+ known as BFreddie <ac+B was created to essen the Bmonopo i>ationB of home ending that it was fe t that Fannie <ae enDoyed. /oth Fannie <ae and Freddie <ac were at one time considered BgovernmentB a!spices+ b!t now are considered private estab ishments.

History: Help for Veterans

E. )or d )ar (( came a ong+ and h!ndreds of citi>ens went to war. )hen it ended+ they ret!rned home to pick !p their ives where they had eft off+ or to start a ife. #hese peop e needed p aces to ive+ so the .erviceman%s 'eadD!stment Act of 56FF+ &!b ic $aw C:-@F7+ was enacted. #his made it possib e for veterans borrow money for the p!rchase or b!i ding of a home. .evera maDor changes in the Act have been made in the years since 56FF+ a owing veterans of s!bse"!ent wars+ s!ch as Gorea+ 2ietnam and+ most recent y+ the ;! f wars+ to have the same advantages in obtaining home oans.

Effects
@. A home oans---conventiona + 2A+ Fannie <ae+ and Freddie <ac-accomp ished the same goa : they a owed peop e to become homeowners. #he 2eteran%s Administration+ Fannie <ae and Freddie <ac+ however+ provided a eve of protection for the oans and those invo ved with them that other financia instit!tions might not necessari y have. &art of this had to do with their governmenta ties 0at east !nti Fannie <ae and Freddie <ac became private entities1+ as we as their overa strength as ending agencies.

Benefits
F. 3aving different types of home oans to choose from a ow more peop e to be ab e to own their own home. Depending on the terms and conditions+ it may be easier to obtain a oan from one entity than from anotherH however+ the same goa is attained: home ownership.

8.

Potential

As ong as there are financia instit!tions that wi make home oans+ there wi be the opport!nity for peop e to own a home. #here wi probab y be changes+ especia y in s!ch areas as interest rates+ simp y beca!se the ho!sing market changes at different times+ depending on the nationa economy.

.ome Loans and other )nformation

8choice is one of the sites on the internet which is providing the best home loans. There are many types of home loans and these are as follows1 3asic =oans

5i"ed >ate =oans 0nterest #nly =o :oc Standard 9ariable >ate Split >ate =ine #f ;redit ?o :eposit

5ollowing are the above mentioned loans which one can en.oy. The e"planation of all the loans is as follows1 3asic =oans #ne can go for this type of loan, by getting this loan you can avail the lowest interest rates and the fees of bank as well. The bank fee is also very low. The features are very minimal@ the people don<t have to go for any e"tra repayments. 5i"ed >ate =oans 0f the person wants to avoid the increase of interest rate than the person should go for the fi"ed rate loan because these loans provide the stability in the monthly payments and the stability in the interest rates mostly it happens between one to five years but after then one can choose for the variable rate. 4ith the help of the fi"ed rate one can stabili,e the amount of budget. 0nterest #nly These loans are very suitable for the people who are actually investors and like to invest in different places. Aere the amount of repayment is very low and the investors can get a large amount of benefit from these loans. =o :oc =oans 5ollowing are some of the features of the loans and also suitable for some specific people and these are as follows1 #ne can get simple and very $uick type of financing from these loans.

The people who are self employed can avail this loan very easily. The application procedure of the loan is very easy and systematic.

The paperwork is very less in this type of loan and this thing help the borrower to get the loan very easily and without any hassle. The one who is applying for the loan must maintain the proper and clear history of the credit.

The line of credit is very much common because of the features and also because of the fle"ibility. Aere the amount of the limit is very much than the original credit cards. ?ot every one can avail these lines because these lines basically offer freedom to the people but not to every one. Aere the interest rates are actually very much lower than the interest rates on the credit cards. These home loans can be used for the buying the personal poverty and also to purchase the investment properties. So there are many options for the consumers to make a decision for getting the loan. ortgage loans are very secured loans because to get these loans, one has to give some valuable asset to the lender. 0f the borrower is not able to pay back the loan then the lender is obliged to get the valuable given asset on the permanent basis and after that the lender can sell out the property to get the money out. #ne can get the real and accurate information about the mortgage home loan from the banks and any other financial institutions. The needy people with bad credit can also apply for the bad credit home loan. The banks and other financial institutions are providing the home loan rate to the people without any discrepancies. The members of the credit unions can avail the home finance facility. Aome loan refinance is the term which one must know because sometimes it happens that to repay the amount of money taken is very must on urgent basis so the loan refinance helps the person to repay all the liability. Aome financing is very important term in finance and all the financial loan sites are providing the information about the home financing. Aome mortgage loan could be used to repay the amount of loan has taken previously to buy the loan. #ne can get the loan for the re*establishment and one should know that in the world of advancement, you can also go for home improvement loan. These loans one can use for the purpose of improving the home lifestyle, the structure of the home as well. There are many financial institutions which are offering the best package for the bad credit home loans, the person with the bad credit history record and the bad credit report can also gain the advantages of the home loans. So the fact remain the same that every one should know that from where to search the best package of home loans because without searching it may happen that you are not able to avail the best offer which is available in the market by the banks or any other financial institutions. Aome loan interest is the toughest thing in the loan procedure because the repayment of the amount is not big issue but the interest rate is the issue for the customers. Aome loan calculator is able to define the interest rates and the amount of the payment which the borrower has to make every month. The calculator provides the accurate figures to the borrowers and the lenders. #ne can get the calculator from offline stores and as well as from online stores. 3ut one should buy the calculator from the place which provides the calculator at the lowest rate. 0f you want to know about the home loan rates you can see the financial maga,ines and you can also visit any bank or credit union for the accurate figures. So now you can not only apply for the car loan etc but also can apply for the home loan. 3ut before going for the loans one should know the reason to have the loan.

3ome loan financing is the money which is orrowed for home. )ome loan !inancing is asically taken for the purpose of uying things which are needed for the renovation or for the construction which high priced. The rate of interest charged for the home loan financing is low. The rates are low as the lender doesnt lose his money even in case of default of payment.
any people spend a great deal of time looking for their home, but neglect to spend much time researching options for their home loan. 5inding the perfect home loan is .ust as important to finding the perfect home because determining the home loan that is right for you can save you a great deal of money. 4e aim to connect home buyers with a specialist that can help them with their specific needs. Please use our home loan resources to find out more about 5A! loans and the options

available to you or start the process now by contacting one of our $ualified 5A! home loan e"perts. #ur e"perts can help find the right loan for your perfect home.
%vervie$ Bour Aome is a place where you rela" after coming back from your day)s tiring work, it is that place where you can give time to your family C spend beautiful moments with them. To ac$uire a home which can be christened your 6#wn Aouse7 is a life*time decision C has to be taken with a lot of planning C re$uires huge finances. Bour :ream Aome is not very far away with a Aome =oan which will fulfill your :ream into a reality. 4e at :ealD=oans are working constantly to get you the 38ST =oan :eal C have brought a small guide which would answer some important $uestions related to Aome =oan C help you decide your loan deal. 2hat is a .ome loan Aome =oan is a Secured =oan offered against the security of a houseEproperty which is funded by the bank)s loan, the property could be a personal property or a commercial one. The Aome =oan is a loan taken by a borrower from the bank issued against the propertyEsecurity intended to be bought on the part by the borrower giving the banker a conditional ownership over the property i.e. if the borrower is failed to pay back the loan, the banker can retrieve the lent money by selling the property. 2et more 0nformation on home loan section click !rticles about Aome =oanand Aome =oan must read.

5or determining home loans eligibility one needs to understand the calculations involved in it. !s calculations are rarely e"plained in a simple form, it can be hard for a layman to understand them. 4ith the view to e"plain easily, following is an illustration for the determination of home loan eligibility and the reasons for the same. 8asy onthly 0nstallments i.e. 8 0 Payments are calculated on the basis of monthly income of the individual. Aousing 5inancial ;ompanies %A5;s& consider different percentage of monthly income for 8 0 payments for different monthly salary slab. The following table shows how the percentage of monthly salary that is considered for 8 0 payments depends on the net monthly salary. ?et onthly Salary

F of salary %monthly& factored in determining 8 0 payments 3etween >s. G,((1 + H,HHH D'F 1(,((( + 1H,HHH '(F 2(,((( + ID,HHH ''F I',((( and greater J(F !s per the table if an individual is earning 2',((( monthly salary, ''F of his salary will be considered for 8 0 payments. The amount calculated is %''F of 2',(((& is e$ual to >s 1I,K'(, which is also known as disposable income. !nd if another individual is drawing salary of >s D',((( per month. 0n his case, >s. 2K,((( will be considered for 8 0 payments i.e. J(F of his salary. 0t means that percentage of salary considered for 8 0 payments rises with the increase in salary and vice versa. !ll A5;s lists in 8 0 table monthly 8 0 per lakh for varying tenures and interest rates, which is different for every A5;. The eligibility for home loans is determined by 8 0 per lakh and individual income available for making 8 0 payments. =ets understand this with the table1 onthly 0ncome %>s& 2',((( 0ncome available for 8 0 payments %i.e. ''F of >s 2',(((& or disposable income 1I,K'( >ate of 0nterest %F& G.(( Tenure %Brs& 2( 8 0 per lakh %>s& GIJ Aome loan 8ligibility %>s& 1,JJD,(((

0n the above table rate of interest is GF, tenure is 2( yrs and 8 0 per lakh is GIJ. 5or calculating home loan eligibility the disposable income %i.e. >s1I,K'(& is divided by 8 0 per lakh %i.e. >s GIJ&, which works out to be >s 1,JJD,(((. This is the fundamental nature of calculating home loan eligibility but some A5;s have different method of calculations. =ike they may consider gross salary instead of net salary for calculations. !lso for determining income available, they may have different percentage structure from that of table shown above. 0n case of self*employed persons different method of calculations are adopted. Some intangible factors are also considered for the eligibility, they are1 * L Profession of the individual1 A5;s have a list of professions, which are negative or black listed. Though the list is not official but any individual from these professions face lots of difficulties in getting a loan. L Property)s =ocation1 =ike negative profession there is a list of negative area for which loan can)t be granted. 5or the loan the property has to be within geographical area defined by A5;s. L 0ndividual Personal :etails1 These details include individual)s financial status, his credit repayments history, saving habits etc. for deciding home loan eligibility.

Doc"ments re2"ired for Home Loan Sanction

ICICI Bank Home Loans, IndiaOs leading Home Loans &rovider, offers attractive interest rates and un eata le enefits to ensure that you get the est deal. 9eeping your convenience in consideration, we ask you for minimal mandatory documents for thesanctionin# of your )ome loan, to keep the process totally hassle(free. :e re&uire the following documents to sanction your home loan. Sanction Doc"ments )ompleted application form 0hotograph Fee )he&ue 0hoto Identity 0roof *ge 0roof 6ignature -erification 0roof 5esidence *ddress 0roof "ast + monthsO 6alary 6lip Form 1M %ank 6tatement for the last M months from 6alary *ccount 5epayment Track record of e'isting loans ? "oan closure letter

Doc"ment for t)e Salaried

Doc"ment for t)e Self-em%lo'ed Income Ta' 5eturn ? )omputation of Total Income ? *uditors 5eport ? %alance 6heet ? 0rofit G "oss *ccount certified y )hartered *ccountant for last 2 years #+ years for 3ome 8&uity$ # oth for usiness and personal of partners?directors$ %ank statement for the last M months from operating account 5epayment Track record of e'isting loans ? "oan closure letter %oard 5esolution in case of a company 0roof of e'istence 4ffice *ddress 0roof 0hoto Identity 0roof, 5esidence *ddress 0roof, 6ignature -erification 6tatement for all the main partners ? directors.

3ome loan eligi ility norms

.!bmitted by admin on .eptember EE+ E??6 I F:58 pmE ,omments

Ashish Gupta
A host of factors affect the e igibi ity of a potentia borrower. A bank has its own parameters and criteria to determine the e igibi ity and "!ant!m of ho!sing oan. A borrower wo! d do we by being aware of these factors. Verification #he app ication form provides information abo!t the app icant. #he information that is s!bmitted in the app ication form by the individ!a is verified from vario!s primary and secondary so!rces - thro!gh interview+ ca ing !p the emp oyer+ verifying from the bankJs database etc. (n case of wrong information/ inconsistencies+ the oan app ication is iab e to be reDected. Repayment capacity #he financia position of the individ!a is an important determinant. #he individ!a Js financia profi e is an important consideration for the bank. #he oan e igibi ity as we as repayment capacity depends on the financia position of the borrower. #he income eve + net income+ iabi ities etc determine the amo!nt of oan a person is e igib e for. #he re"!irements inc !de a partic! ar minim!m income or a fi*ed so!rce of income. #he credit history of the borrower a so p ays an important ro e. 9s!a y+ the enders maintain a database of the borrower and verify the credit history to check o!t previo!s repayment defa! ts+ even from other enders. Profile #he persona profi e of the individ!a is a so important. /anks take into acco!nt the persona profi e of an individ!a . #hese inc !de factors ike ed!cationa "!a ifications+ profession+ n!mber of dependents+ assets owned+ iabi ities owed+ savings history etc. A higher n!mber of dependants or e*isting iabi ities imp ies ower repayment capacity. Age (t p ays a maDor ro e in determining the earnings potentia of an individ!a . (n case a property is co-owned+ the co-owner cannot be a minor. A so+ the co-owner cannot be above a certain age imit. #he age imits are set to minimise ownership disp!tes. #he age imit a so affects the ten!re of the home oan and 4<(s. #he app icantJs retirement age is a so considered. For e*amp e+ if an app icant is F8 years of age and is set to retire at 7? years+ the ma*im!m oan ten!re avai ab e wi be 58 years. A so+

in case the bank has a C8-year age imit for a co-app icant+ and if the app icant is F? years o d and the co-app icant is 7? years o d+ the home oan wi be sanctioned for a ma*im!m period of 58 years on y. Location of property #his a so affects the e igibi ity. ,ertain areas are specified as being KnegativeJ in the books of some banks. (f an individ!a intends to b!y a property in s!ch an area+ he wi not be granted a oan. /anks have specific norms with respect to a minim!m area of the f at. #his may be b!i t!p area or carpet area. #he age of the property is a so an important consideration in case of p!rchase of e*isting properties. 3ome oans on resa e properties are sanctioned on y if they are ess than 8? years o d. /anks cond!ct ega and technica appraisa s of the property to see whether the tit e of the property is c ear+ there are no ownership disp!tes+ the property is free from any enc!mbrances etc. (n case there are any obDections in these appraisa s+ the oan app ication is bo!nd to be t!rned down.