mortagesandforeclosures

by Walter J. McKibbin

When the concept of banking first arrived on the scene, a bank was viewed as a place where people could deposit their money in order to keep it safe. This was the premise of the most ancient of the banks.

The next major change in banking was the concept of charging interest for a loan. For the longest period of time, laws against Usury kept this from happening in Christian countries - an interpretation of the Bible forbade charging interest on loans. Later, this expanded to paying people interest to hold deposits within the bank.

There is no bank in the world that does not issue loans; it's their primary reason for existence. Modern banks offer a wide array of loan products for every consumer (and business) need.

Most people's first relationship with a bank is for a checkbook, or for a savings account. Their second is usually a loan of some sort.

Most people's first experience with taking out a bank loan is for a car. Their second is for paying for a home, or as a student loan.

Nobody in the present day and age (unless they are born to money) has enough money lying around to make big ticket purchases like a condo or house, without having to resort to a bank loan.

I myself could never have hoped to buy a condo without a bank loan. (Of course, it is another matter altogether that I will continue to pay this bank loan, with interest, for another fifteen years to come!) Even a mortgage is just another variety of a bank loan issued for housing purposes, with collateral attached.

There are also other types of bank loans issued for various purposes. A personal bank loan will enable you to buy a broad spectrum of goods or services. This sort of bank loan will come in handy for repairs, renovations, marriages, celebrations, events or any other expenses that you don't have cash lying around for.

This type of loan is also sometimes used to buy things like computers and home renovations; basically anything that doesn't require a significant portion of the borrowers income is a valid target for this kind of loan.

Broadly speaking, even credit cards are a form of a bank loan that you can repay. 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 are probably the vast majority of loans issued by banks. But they may not compare in volume or value to bank loans issued to businesses worldwide.

Most businesses rely on having short term credit terms to make shortfalls in payroll, slow sales periods, or capital investments. More than 99.99% of all lending is made by banks to businesses. This is why investment banks got a bailout and you didn't. If those loans dry up

Without business loans and credit, the vast majority of businesses would collapse. This business loan mentality is what drives the modern financial world.

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