Introduction About Finance And Loans
Finance is a science of money management
Finance is a science of money management. The area of finance includes business finance, personal finance and public finance. It includes not only saving money but also lending money. The finance mainly depends upon the factors like time, money and risk and how they are related to each other.Finance mainly works through peoples and organizations depositing money in the bank. Organization or individual deposited money in the bank and bank lend that money to other individuals and charge interest on loans.Loan is a type of debt in which the individual borrows an amount called the principal. The borrower has to pay back the amount later with interest. Normally the money is paid back in regular installments. Different types of loans are available in public and private sectors. They are secured loans, unsecured loans and demand loans.
In the case of secured loans the borrower has to give some asset as a security for the loan. Unsecured loans are available from any financial institutions under some marketing packages. Demand loans are short term loans which may be secured or unsecured.
The most common secured loan is mortgage loan. People need home loans for construction and reconstruction of their home. Most of the people for this purpose prefer mortgage loans. In these types of loans, the borrower has to give security to the financial institution mostly it will be the house. If the borrower fails to pay the loan in time, the bank has the legal right to repossess and sell the house and thereby recovers the money they lend.
Individuals whose income is greater than the expenditure will lend or invest the extra money. At the same the individual whose expenditure exceeds the income will borrow money from other individual or any financial institution. This is the main technique followed by many people in the financial industry. That means the lender can find a financial intermediary such as a bank.
You can get various home construction loans. The main government guaranteed loans are Federal Housing Administration (FHA) and the Veteran Administration (VA) loans. The FHA loans are easier to get and allows the persons who is borrowing to finance more, than from private lenders.
Finance is used by a wide variety of organizations as well as individuals and non profit organizations. It is one of the most important aspects in business. Proper financial planning is essential to ensure the future of each and every organization and also the way to success.
by: addy