What is Loan from Banks?
A Loan from Banks is one that entails the redistribution / transfer of financial assets over a time frame between the banking institution and the borrower. The borrower borrows loan from banks (lender) or any other financial service provider. Initially the borrower borrows a sum of money which is called the principal. The borrower is obligated to pay back the amount borrowed to the lender along with the rate of interest as quoted by the bank (lender).

Generally in Canada the money is paid back either in regular installments or as partial repayments. Acting as the provider of loans is by far one of the foremost tasks of the banking institution.

Broadly the types of loan from banks can be classified into:
* Secured Loan
* Unsecured Loan

A Secured Loan is a loan in which the borrower who borrows loan from banks pledges some sort of asset like car, property etc. as collateral for the loan borrowed. The types in which secured loans may be available from banking institutions in Canada are as follows,

1. Mortgage Loans
2. Recourse Note
3. Stock Hedge Loan

Mortgage Loan is a kind of secured loan from banks used quite often in Canada to purchase houses. The money provided by the bank is used to purchase the house and in turn the borrower gives the bank a security on the title to the house purchased. This security is held by the bank until the mortgage is paid off completely. Laws governing the issue of loans allow the banking institution to have legal authority on the security if the borrower defaults on the payment of loan. In certain instances the loan availed for the purchase of say house / cars etc… can itself be secured by the house / car. In the above circumstance the duration of the loan period is shorter.

Recourse Note is a type of loan from banks used in limited partnership agreements.

Another special type of loan from banks is the Stock Hedge Loan in which stock of a borrower is hedged by the banking institution against a loss.

An Unsecured Loan is a type of monetary loan in which the loan is not secured against the assets of the borrower in any form. The types in which unsecured loans may be available from banking institutions in Canada are as follows,

1. Personal Loans
2. Credit Card Debt Loan
3. Credit Facilities
4. Corporate Bonds

An unsecured loan is generally referred to as a personal loan that involves no hard and fast clauses pertaining to the redistribution of monetary funds.

A bond that a corporation issues to raise money to expand its business is called a Corporation Loan. A loan availed in order to clear the debt off your credit card is called a Credit Card Debt Loan.

The interest rates over these loans may vary from borrowers to lenders and are not regulated by law in the country of Canada.

Although a loan doesn’t start off as an income to the borrower it may become so on the borrower being discharged of his / her debt.

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