Every human has his dreams and desires which he wishes to fulfil. It has become all the more important to know more about a loan on offer depending on the need of a customer. These dreams are not limited and cannot be controlled. For fulfilling his dreams, he needs monetary assistance. Finance plays a vital role in the life of humans. It has become more than a necessity in today’s world. No work is possible without the aid of money.
It is not really possible for every working professional to have a sufficient amount of money to accomplish his wishes and hence the need to know more about loan facility. Thus to get the required sum of money he borrows money which he later pays off.
In technical terms, the rate of interest is decided by the lender. Different methods are used for calculating the rate of interest. The lender of a loan can be an individual, a bank or any financial institution. It is not necessary that the rate of interest is the same. It is evident that a customer needs to know more about loans while selecting the best one.
Also, the time to pay back the loan is decided by the mutual consent of the lender and the borrower. The rate of interest is decided on the basis of the amount of the loan that is given and the period that is granted for the repayment.
The money that is borrowed is to be paid back in instalments. The instalments may be monthly or quarterly depending on the amount of loan. In certain situations, the lender asks for security from the borrower against the loan that is given by him.
This security is nothing but a guarantee. It may be equipment or land or anything that the borrower is in possession of. By doing this, the lender reduces his risk on the loan that he grants. The borrower holds the title on the land or property or the asset that he gives as security but would end up losing it if he is unable to pay back the debt.
If not security, a contract is made while the loan is given. A contract is another way in which the lender is not at a risk. The contract works as evidence that the loan was given. The borrower cannot deny the fact that he had not taken the loan.
This contract is to be signed by both parties and in case any of them fails to fulfil the requirements, he can be sued. But still, it is voidable at the option of the aggrieved party.
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