LOAN AND LOAN SOURCES

A loan is money borrowed that has been promised to be repaid between a specific period with interest. When a loan is taken the borrower has entered into a contract with the lender and it is one of the common sources of financing. Loans are classified into categories, long term loans and short term loans

Long term loans are loan whose maturity exceed one year, while short term loan maturity do not exceed two years. Whether long term loan or short term long they are usually backed by collateral such as home, stock, bond or things purchased with the loan, since the lender is the one undertaking the highest risk, they have to ensure there is a means of recovering the money should the borrower fail to repay the loan. Since every loan given must be repaid with interest lenders use their discretion to charge interest depending on the situation.

A start up company will be charged a higher interest than a company that has been making profit over the years. Loans can be classified into long term, short term and intermediate loan

Long term loan
This are loans that the maturity period for repayment is above one year, most long term long are usually secured with the asset the loan was used to purchase, for instance a loan gotten to purchase a mortgage is often secured by the asset, therefore should you fail to repay the loan at the time of maturity, the lender has the right to repossesses the asset in order to recover the money.

Short term loan
Loans of this type have maturity periods that do not exceed one year, most short term loans are used to make up for shortage in cash

Intermediate Loan

Are loans used to purchase household items such as furniture, office equipment, vehicles and plant, maturity for this type of loan usually exceed one year but less than five years, there should you fail to repay the loan, the lender has the legal right to seize the asset that the loan was used to purchase in order to recover their money

Take note that the of maturity of every loan you is important, there before applying for a loan, consider your needs first and look for other sources fund to supplement your loan in order to reduce the debt that you might be owing the lender, since the lender want you to be indebted to them, also consider your source of repaying the loan before the expiration of maturity period or else you will be a the mercy of the lender.

There are many sources of loans available today only if you search properly and you can find many of them online but make sure to check on many lenders as possible before deciding to the one to borrow money from, but remember every loan is charged an interest.