Real Estate Loan

People may borrow for building or buying houses. House building finance companies and other specialized financial institutions cater to such needs.Loans provided for such purposes are referred to as real estate loans, which have the following attributes:

1. The are long term loans the period of which ranges from 10 to 30 years or so years.
2. Rate of Interest is worked out on the basis of the period of loans.
3. These loans are secured.
4. The title of ownership to the property rests with the creditor/lender.
5. The amount of loan is usually in hundreds of thousands.
6. Loan providers are house building finance companies and other specialized finance institutions.

Cash Loan

First two loans were in kind. Customers and consumers, however, may need cash to meet other requirements. Cash loans can be had from these sources.

1. Commercial Banks
2. Small Loans Companies
3. Credit Unions
4. Life Insurance Policy Loans
5. Pawn Shop / Pawn Brokers
6. Relatives and Friends
7. Loan out of provident fund

Hire-Purchase / Installment Sales

The hire purchase or installment sale is a kind of credit allowed to consumers. Like in the charge account credit is not in the form of cash; it is in kind.

This kind of consumer finance is also immensely prevailing everywhere. It is most used by salaried or those people who belong to low or middle income groups.

This method of finance prompts consumer to hire-purchase TV, furniture, cars, VCR , Refrigerators, and other home appliances. To avail this opportunity the buyer has to pay on the spot around 10 to 25 percent of the total price. This payment is known as Down Payment. The balance is payable in six, twelve, or eighteen months equal installments. The installments include interest.The greater the period the higher amount of interest is charged.

Charge Account

This is the commonest type of credit finance popular all over the world. Consumers, both ladies and gents, open an account with shops and stores from where they buy on credit throughout the month and pay off at the beginning of the next month. The usual period of credit is one month. Those who pay off their debts regularly are considered to be good and reliable customers. Those who are poor in paying off find it difficult to buy on credit.

The Charge Account is interest-free but the customer cannot receive cash discount. This is short Term loan is unsecured i.e no guarantee, surety collateral or security is required.

The account incurs cost on the seller. He has to meet the expenses on investigation, risk, collection, reminders, phone calls, book-keeping etc. Charge Account is common in home delivery of newspapers magazines, milk.

The main disadvantage of the account is that the account holder is inclined to excessive and unnecessary buying, and at the time of payment they feel over-burdened.

Consumer Finance

It is personal or domestic finance which a persons needs to live his life

Consumer finance is met by personal income and by loan.

If the personal needs are met by loans the following sources and types of consumer finance are available.

1. Charge Account
2. Hire-Purchase / Installment Sales
3. Cash Loans
4. Real Estate Loans
5. Credit Card

Bonds and Debentures

Companies need funds in addition to capital ( owner's equity). To finance this additional requirement they have to borrow from public they issue bonds or debentures. The bond is an obligation imposed by a contract or promise. It is an interest bearing certificate issued by a government or business redeemable on a specified data. The reason for issuing bonds is to arrange a long-term finance in large amounts which is single or a few banks or lenders cannot supply. The amount of a loan is divided into small units known as bonds. this small division facilitates the investor to buy them. Each bond is long term interest carrying certificate.For the debtor company it is bond payable shown on the long term liability side of the balance sheet. For the creditor it is bond receivable.

Term Life Insurance

Under it life is insured for a limited or definite period say, 7 years, 10 years, 20 years and so on. If the insured dies during the period insured the amount of the policy will be paid to his heir or heirs immediately and no premium will have to be paid any more even if he dies right after paying the first premium. If he survives the whole period the policy will determined at the end of the specified period. The main advantage of this type of policy is its low premium.