Loan :
Loan is a transaction where by money or monetary secured loan calculator things are given by one
person to another. The person giving loan is called financer or money
lender and the person accepting the loan is called loaner. Mainly there
are two types of loans. (1) Secured loan (2) unsecured loan.
Secured Loans :
The secured loans are always secured by specifically securities like
properties, documents, guarantees etc. secured loans are generally given
by banks, financial institution have their money lenders. The banks and
financial institution have their specified norms Types of Business Loans of margin money and
security margin. The banks and financial institutions decide the rate of
interest and period of repayment. Some banks give loan as per security
or credit worthiness of the loaner. The banks also consider repayment
capacity of the loaner. Thus the banks and financial institution are
interested to get money back along with interest rather than to get the
security realized in care of default. Because for getting security
realized the bank have to pass through long legal procedure and
sometimes the securities are not folly recovered or realized.
Unsecured Loans :
The secured loans are mostly bearing interest, while unsecured loan may
or may not have interest element. The unsecured loans are generally
given by small business loans the relative or the persons known to the lender of money. The
same are given on trust. The unsecured loans are generally given for
short period of time, while the secured loans are mainly for long period
of time.
Accounting of Loans :
From the view paints of the loan received is an liability and shown as
secured or unsecured loans on liability side of the balance sheet. On
other hand loan given or financed is a current asset and the same is
shown other head loans & advances in the balance sheet. In care of
secured loans the securities are also mentioned in the balance sheets of
the companies.
Kinds of Secured Loans:
There are various kinds of secured loans such as mortgage loan, loan
against pledge, loan against hypothecation, loans against guarantee,
bonds, debenture, cash credit, Books Debts, Bills Discounting etc.
Special Category Loans :
Certain loans are of special category. Governments, Charitable trusts,
Societies or such other institutions give finance to students or to poor
persons for uplift must of the certain sector of persons. Here there is
no motive to earn interest income. Securities are also not there in
such cares.
