Although this article focuses on monetary loans, in practice any material object might be lent. In this arrangement, the money is used to purchase the property. In some instances, a loan taken types of bank guarantee pdf to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing.
There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer. Unsecured loans are monetary loans that are not secured against the borrower’s assets.
These may or may not be regulated by law. Interest rates on unsecured loans are nearly always higher than for secured loans because an unsecured lender’s options for recourse against the borrower in the event of default are severely limited. In insolvency proceedings, secured lenders traditionally have priority over unsecured lenders when a court divides up the borrower’s assets. Thus, a higher interest rate reflects the additional risk that in the event of insolvency, the debt may be uncollectible. They can be “called” for repayment by the lending institution at any time.
Demand loans may be unsecured or secured. A concessional loan, sometimes called a “soft loan”, is granted on terms substantially more generous than market loans either through below-market interest rates, by grace periods or a combination of both. Such loans may be made by foreign governments to developing countries or may be offered to employees of lending institutions as an employee benefit. The monthly payments of personal loans can be decreased by selecting longer payment terms, but overall interest paid increases as well. For car loans in the U.