Submitted by Martin Martinez
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The idea of a bank that loans out money to the public totally changed the premise of ancient banks that stated that a bank was only a place to deposit money for safeguarding.
Present day banks are synonymous with bank loans to such an extent that practically every individual who has a bank account has a bank loan of some sort or the other.
It is improbable that in the present day and age anyone (unless born to money) has enough money lying around to make big ticket purchases like a flat or an apartment, without resorting to a bank loan or mortgage.
Bank loans have attained the reputation of a necessity in today's world where the temptation to own products are so great that one takes the recourse of a bank loan and in return enjoys the product or benefit while paying back the loan in installments.
Be it an auto loan, a bank loan for a specific purpose or a home loan. The present day banking system provides loans for practically anything and everything that one may want to own or need. Without these convenient bank loans lots of people would never been able to purchase that new car or a laptop or a home.
A bank home loan is similar to a mortgage with some form of collateral attached, usually the product purchased or the persons home. The only matter of concern that remains is that you can get tied up in payments for a long period and have to keep on paying interest on the loan as well as pay off the capital.
With the passage of time, bank loans have become so versatile that there are bank loans for buying white goods, consumer goods like computers and even for repairs, renovations, marriages and celebrations. It is a case of "you name it and a bank has it". There exist student loans too, where a bank advances money for studies with a condition of repayment after the student joins the mainstream and starts earning a regular income.
Broadly speaking, even credit cards are a form of a bank loan that you can repay over time in installments and some banks even offer you loans to pay up other loans you may have taken in the past.
Bank loans issued to individuals for the purpose of housing probably out number other loans issued by banks. But they may not compare in volume or value to bank loans issued to businesses worldwide. Whether it is a small business operated out of the home or a large business that needs millions of dollars in order to tide over a cash flow problem or to acquire assets, bank loans issued to businesses far outstrip individual loans. In fact it will not be an exaggeration if one were to say that without bank loans the vast majority of business worldwide would collapse. Business in modern day thrives on the banking system and investment, lending, finance and credit that it facilitates.