Introduction: The Monetary situation of this day requires a lot of property even for the satisfaction of the basic needs of the people. The present situation does not enable the people to buy property and sell as freely as in the olden days. This called for borrowing money from who has it freely available. This process is called as lending of money. Money lending happens on a large scale nowadays that it has become a huge industry. The Banking sector was mostly developed based on this concept. The concept of lending involves giving money to a person, who is supposed to repay the amount with a stipulated extra amount that varies based on the amount lent known as the interest. This varying amount is calculated on a percentage basis of the principal amount and hence known as the rate of interest.
The Types of Lending: There are various types of lending strategies that are prevalent at present, with loans and credit cards being at the top of the list. Canada has various regulations that control this process of lending the money. These regulations control the way in which the money is lent and also governs the various rates of interest. The types of loans that are governed by these regulations include the mortgages, credit cards, personal loans and many other services that are offered by the banking corporations.
The banks provide these services to the public who are in need of the money by these provisions of loans. The banks in-turn gets their money from the people themselves who deposit them as savings. This money is also offered a rate of interest which is comparatively lower than the rate of interest levied on the lent money. This is because even these corporations do need to have a profit margin. The money is guaranteed to be saved by the bank even though they are lent. This is due to the regulation of reserves that state that the bank should have a percentage of money as a guarantee in the central reserve bank that holds all this money.
Rules and regulations of lending: Usually the money is lent to a person based upon the credibility that is guaranteed by the credit reports that are drawn on his financial status by a third party company. In case of credit card type of loans this is more than enough but for other types of loans such as mortgages, there needs to be a security or an object that has enough value to compensate the loan, kept as a security for the person. Incase the person is not able to repay the loan, the object would officially belong to the lender. This object is usually specified properly and mentioned while signing the agreement for the lending of the money. The Canadian law is very strict on these matters and there are various regulations that govern the process of loan recollection. Some unscrupulous people might specifically and intentionally default from the repayment of these loans. There are also people who involve in unnecessary force while collecting back these loans. During these times it becomes necessary to regulate the ways in which these are done.
