loans – channelizing funds into needed destinations
loans channelizing funds into needed destinations
loans refers to the process of channelizing funds from those who have it in terms of savings to those who are in need of it. Call it loans or debts or advances there can be many synonyms of it but the function remains the same and that is to ensure that money doesn't remains ideal for a longer period of time as it is very important to circulate money in order to create more of it.
In fact the basic aim of a financial system working in any country is to make sure that money is being channelized from those who are having it as savings to those who are in need of it in the form of loans as it will give an opportunity to the users of the funds to make more effective use of the funds and multiple it that will result in ensuring that funds are being allocated to the most needy and right destinations.
Loans are basically of two types one is the secured loan types in which a asset is required to be deposited and it is considered that the asset is backing the loan amount and the lender is eligible to take possession of the asset in case of defaults of payments by the borrower and the other type being the unsecured loans which are made typically for tenants who don't have any asset with them but still want to raise a loan.
So different types of loans have been formulated to make sure that every needy individual becomes eligible for raising a loan and fulfill his desires.