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intership report in fianance-a loan

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LOAN
In finance, a loan is a debt evidenced by a note which specifies, among other things, the principal amount,
interest rate, and date of repayment. A loan entails the reallocation of the subject asset(s) for a period of time,
between the lender and the borrower.
In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and
is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is
paid back 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 debt, which provides an incentive for the
lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract,
which can also place the borrower under additional restrictions known as loan covenants. Although this article
focuses on monetary loans, in practice any material object might be lent.
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.
Types of loans
[edit]Secured
See also: Loan guarantee
A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral.
A mortgage loan 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 by the car, in much the same
way as a mortgage is secured by housing. The duration of the loan period is considerably shorter often
corresponding to the useful life of the car. 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.
[edit]Unsecured
Unsecured loans are monetary loans that are not secured against the borrower's assets. 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 (may be secured or unsecured)
The interest rates applicable to these different forms may vary depending on the lender and 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.

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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. An unsecured
lender must sue the borrower, obtain a money judgment for breach of contract, and then pursue execution of the
judgment against the borrower's unencumbered assets (that is, the ones not already pledged to secured
lenders). 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.
[edit]Demand
Demand loans are short term loans [1] that are atypical in that they do not have fixed dates for repayment and
carry a floating interest rate which varies according to the prime rate. They can be "called" for repayment by the
lending institution at any time. Demand loans may be unsecured or secured.
[edit]Subsidized
A subsidized loan is a loan on which the interest is reduced by an explicit or hidden subsidy. In the context of
college loans in the United States, it refers to a loan on which no interest is accrued while a student remains
enrolled in education.[2] Otherwise, it may refer to a loan on which an artificially low rate of interest (or none at
all) is charged to the borrower.
An unsubsidized loan is a loan that gains interest at a market rate from the date of disbursement
1. Personal Loans
These loans are offered by most banks, and the proceeds may be used for virtually any expense
(from buying a new stereo system to paying off a common bill). Typically, personal loans
are unsecured, and range anywhere from a few hundred to a few thousand dollars. As a general
rule, lenders will typically require some form of income verification, and/or proof of other assets
worth at least as much as the individual is borrowing. The application for this type of loan is
typically only one or two pages in length. Approvals (or denials) are generally granted within a few
days.
The downside is that the interest rates on these loans can be quite high. According to the Federal
Reserve, they range from about 10-12%. The other negative is that these loans sometimes must
be repaid within two years, making it impractical for individuals looking to finance large projects.
In short, personal loans (in spite of their high interest rates) are probably the best way to go for
individuals looking to borrow relatively small amounts of money, and who are able to repay the
loan within a couple of years.
2. Credit Cards
When consumers use credit cards, they are essentially taking out a loan with the understanding
that it will be repaid at some later date. Credit cards are a particularly attractive source of funds
for individuals (and companies) because they are accepted by many - if not most - merchants as a
form of payment.
In addition, to obtain a card (and, by extension, $5,000 or $10,000 worth of credit), all that's
required is a one-page application. The credit review process is also rather quick. Written
applications are typically approved (or denied) within a week or two. Online / telephone
applications are often reviewed within minutes. Also in terms of their use, credit cards are
extremely flexible. The money can be used for virtually anything these days from paying college
tuition to buying a drink at the local watering hole. (To find out more about this process, see The
Importance of Your Credit Rating and How Credit Cards Affect Your Credit Rating.)
There are definitely pitfalls, however. The interest rates that most credit-card companies charge
range as high as 20% per year. In addition, a consumer is more likely to rack up debt using a

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LOAN In finance, a loan is a debt evidenced by a note which specifies, among other things, the principal amount, interest rate, and date of repayment. A loan entails the reallocation of the subject asset(s) for a period of time, between the lender and the borrower. In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back 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 debt, which provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which can also place the borrower under additional restrictions known as loan covenants. Although this article focuses on monetary loans, in practice any material object might be lent. 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. Types of loans [edit]Secured See also: Loan guarantee A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral. A mortgage loan is a very common type of debt instrument, used by many individuals to purchas ...
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