Some kinds of Loans

Most of banking activities are conducted by the commercial banks which provide banking services.These are some types of service of loans:

1, Unsecured loans: The short- term, unsecured (no collateral) loans are self- liquidating. This type of loan is recommended if borrower have an excellent credit rating. It is appropriate if the borrower has immediate cash and can repay the loan in the near future or can quickly obtain long- term financing. The reasons for using the unsecured type of loans are seasonal cash shortfalls and desired inventory buildups. But with this kind of loan, it also has some disadvantages.

The first, it carries a higher interest rate than a secured loan

The second, payment in a lump sum is required

2, Secured loans

They are those loans that are protected by an asset or collateral for the item purchased like: a home or a car, can be used as collateral. Also the finance company or bank will hold the deed or title until the loan has been paid in full, including interest and all applicable fees. Besides other items such as stocks, bonds, or personal property can be put up to secure a loan as well.

3, Lines of credit

It is any source extended to a business by the bank or any financing institution. A line of credit may take several forms like cash credit, overdraft, demand loan or exported packing credit, term loan, discounting or purchase of commercial bills ....The interest of this kind of loans is only paid on the money actually taken out.

Lines of credit are often extended by banks and financial institutions to credit worthy customers to overcome liquidity problems

4, Intermediate- term loans

They are typically loans with maturity of more than 1 year but less than 5 years. They are appropriated when short- term unsecured loans are not new fixed assets are purchased and long- term loan debt is required. The interest rate of this type of loans is typically higher than short term loan because of the longer maturity period. The interest rate maybe fixed ore variable. And the cost of an intermediate- term loan changes with the amount of the loan and the financial strength