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A Secure Bank Loan

Loans have for a very long time been a great way to make ends meet when salaries and wages are just not enough. There are many ways through which one can get a loan but the most popular one still remains to be a secure bank loan. People acquire loans for different purposes, among these are building new homes, to buy goods such as music systems and TVs, and for starting new businesses both in services and manufacturing. There are also personal loans that are normally given to people to help them meet important needs before their salaries come in. There are a number of risks that banks are faced with when they lend out money to people and among these is the risk of loan defaulters. The latter could occur for a number of reasons such as natural calamities that make it difficult for one to start again. It is for these reasons therefore that banks have put in place the necessary procedures and norms to be followed before giving out a loan.

One of the ways that a bank could determine whether or not a client is loan worthy is by evaluating and examining their credit proposals to find out if they are both feasible and viable financially and technically. The appraisal of every loan is done individually so as to ascertain if the proposal is sound and a secure bank loan can only be granted if the proposal is sound. Banks also safeguards themselves against losses by asking for securities from their borrowers. Security in this context is any kind of asset with specific qualities, one of them being monetary value that the banks can posses in case of a default and applies it toward the repaying of the loan. There are two kinds of securities as far as a secure bank loan is concerned and they are collateral security and primary security.

Primary security in regards to a secure bank loan is basically an asset that directly comes from bank money. A good example is a home that the bank helped to buy can be a primary security. Here, a bank will create their charge against the home which will give them the legal mandate to dispose the asset off to pay off the loan. Collateral security on the other hand is security with additional security that the bank will obtain to get a loan. A good example is when a bank lends money to a manufacturing company and takes its machinery as its primary security and in addition to this it could take the company’s factory building and the latter will be its collateral security. This kind of security really helps banks whenever the primary one is unable to liquidate a client’s secure bank loan. In some instances the primary asset could loose its value because of unfavorable conditions in the market and this could make the bank face higher risks. Finally, when going to get a loan a borrower should also know that they can secure using their personal security. Getting a borrower’s personal security helps a bank to take action against their personal estate to pay off the bank loan.