What is Amount Owed? When a Canadian is in need of a large amount of cash suddenly due to some unexpected reason, then the most logical thing to do is to take out a loan at a bank or any other financial institution. Thus they can get their hands on a source of funds as large as the bank is willing to risk on them. They end up signing a loan agreement that basically describes how they are supposed to repay the amount that they borrow.

The amount owed by the customer is usually repaid in the form of instalments over a period of time that is agreed upon initially and a corresponding rate of interest is also assigned so that the net interest to be paid is calculated. Interest is the reason why banks are willing to lend money to people. That is they way that they make a profit from the amount owed to them from their customers. This is because when a Canadian based business borrows money from a bank in the form of a loan, they end up repaying much more than they actually borrowed since they have to pay the sum of the principal amount that they borrowed and also a monthly interest.

The problem begins when people are unable to pay the money that they borrow from the bank. This might be due to any number of reasons, loss of job security or some unexpected act of god. In that case it is the bank that suffers and thus they usually take a number of preventive measures like going in for loan insurance. This concept is rather common in most Canadian financial institutions. Loan insurance is something that is used to make up for the lack of payment of the amount owed by a customer. It is usually included terms of the loan agreement and the customer is made to take out the loan insurance, thus a small part of the loan amount is given to set up the insurance policy.

In the case of some unfortunate occurrence like a disability, death or even a loss of job security, then the insurance company would pay the reminder of the amount owed by the customer to the bank from where the original loan was taken. There is always the possibility of there being a number of loopholes in the insurance policy agreement or even the loan agreement, thus it is imperative that the customer take the utmost care in reading the fine print of the agreements before even agreeing to sign anything.

Most Canadians are hesitant to take out loans just because they are not sure if they will be able to repay the amount owed by them to the bank. But most banks understand and in times of the financial crisis like now, they might even be willing to waiver some part of the amount if the customer is faced with a situation which makes them contemplate filing for bankruptcy. Since, in that case, the bank would end up losing all of the money as they cannot force a bankrupt person to pay them anything. What is Amount Owed?

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