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In finance, a loan is a debt evidenced by a note which specifies, among other things, the principal amount, interest rate, and date of repayment. A loan entails the reallocation of the subject asset(s) for a period of time, between the lender and the borrower.

In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular installments, or partial repayments; in an annuity, each installment is the same amount.

The loan is generally provided at a cost, referred to as interest on the debt, which provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which can also place the borrower under additional restrictions known as loan covenants. Although this article focuses on monetary loans, in practice any material object might be lent.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding.

Types of loans

Secured

DTZ's public sale group in Singapore auctions all forms of residential, workplace and retail properties, outlets, homes, lodges, boarding homes, industrial buildings and development websites. Auctions are at present held as soon as a month.

We will not only get you a property at a rock-backside price but also in an space that you've got longed for. You simply must chill out back after giving us the accountability. We will assure you 100% satisfaction. Since we now have been working in the Singapore actual property market for a very long time, we know the place you may get the best property at the right price. You will also be extremely benefited by choosing us, as we may even let you know about the precise time to invest in the Singapore actual property market.

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is changing into a rising pattern among Singaporeans as the standard of living is increasing over time and more Singaporeans have abundance of capital to invest on properties. Investing in the personal properties in Singapore I would like to applaud you for arising with such a book which covers the secrets and techniques and tips of among the profitable Singapore property buyers. I believe many novice investors will profit quite a bit from studying and making use of some of the tips shared by the gurus." – Woo Chee Hoe Special bonus for consumers of Secrets of Singapore Property Gurus Actually, I can't consider one other resource on the market that teaches you all the points above about Singapore property at such a low value. Can you? Condominium For Sale (D09) – Yong An Park For Lease

In 12 months 2013, c ommercial retails, shoebox residences and mass market properties continued to be the celebrities of the property market. Models are snapped up in report time and at document breaking prices. Builders are having fun with overwhelming demand and patrons need more. We feel that these segments of the property market are booming is a repercussion of the property cooling measures no.6 and no. 7. With additional buyer's stamp responsibility imposed on residential properties, buyers change their focus to commercial and industrial properties. I imagine every property purchasers need their property funding to understand in value.

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral.

A mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security — a lien on the title to the house — until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter — often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer.

Unsecured

Unsecured loans are monetary loans that are not secured against the borrower's assets. These may be available from financial institutions under many different guises or marketing packages:

credit card debt
personal loans
bank overdrafts
credit facilities or lines of credit
corporate bonds (may be secured or unsecured)

The interest rates applicable to these different forms may vary depending on the lender and the borrower. These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974.

Interest rates on unsecured loans are nearly always higher than for secured loans, because an unsecured lender's options for recourse against the borrower in the event of default are severely limited. An unsecured lender must sue the borrower, obtain a money judgment for breach of contract, and then pursue execution of the judgment against the borrower's unencumbered assets (that is, the ones not already pledged to secured lenders). In insolvency proceedings, secured lenders traditionally have priority over unsecured lenders when a court divides up the borrower's assets. Thus, a higher interest rate reflects the additional risk that in the event of insolvency, the debt may be uncollectible.

Demand

Demand loans are short term loans ^[1] that are atypical in that they do not have fixed dates for repayment and carry a floating interest rate which varies according to the prime rate. They can be "called" for repayment by the lending institution at any time. Demand loans may be unsecured or secured.

Subsidized`<Subsidized loan>...</Subsidized loan>`

A subsidized loan is a loan on which the interest is reduced by an explicit or hidden subsidy. In the context of college loans in the United States, it refers to a loan on which no interest is accrued while a student remains enrolled in education.^[2]

Concessional

A concessional loan, sometimes called a "soft loan," is granted on terms substantially more generous than market loans either through below-market interest rates, by grace periods or a combination of both.^[3] Such loans may be made by foreign governments to poor countries or may be offered to employees of lending institutions as an employee benefit.

Target markets

Personal or commercial

DTZ's public sale group in Singapore auctions all forms of residential, workplace and retail properties, outlets, homes, lodges, boarding homes, industrial buildings and development websites. Auctions are at present held as soon as a month.

We will not only get you a property at a rock-backside price but also in an space that you've got longed for. You simply must chill out back after giving us the accountability. We will assure you 100% satisfaction. Since we now have been working in the Singapore actual property market for a very long time, we know the place you may get the best property at the right price. You will also be extremely benefited by choosing us, as we may even let you know about the precise time to invest in the Singapore actual property market.

The Hexacube is offering new ec launch singapore business property for sale Singapore investors want to contemplate. Residents of the realm will likely appreciate that they'll customize the business area that they wish to purchase as properly. This venture represents one of the crucial expansive buildings offered in Singapore up to now. Many investors will possible want to try how they will customise the property that they do determine to buy by means of here. This location has offered folks the prospect that they should understand extra about how this course of can work as well.

Singapore has been beckoning to traders ever since the value of properties in Singapore started sky rocketing just a few years again. Many businesses have their places of work in Singapore and prefer to own their own workplace area within the country once they decide to have a everlasting office. Rentals in Singapore in the corporate sector can make sense for some time until a business has discovered a agency footing. Finding Commercial Property Singapore takes a variety of time and effort but might be very rewarding in the long term.

is changing into a rising pattern among Singaporeans as the standard of living is increasing over time and more Singaporeans have abundance of capital to invest on properties. Investing in the personal properties in Singapore I would like to applaud you for arising with such a book which covers the secrets and techniques and tips of among the profitable Singapore property buyers. I believe many novice investors will profit quite a bit from studying and making use of some of the tips shared by the gurus." – Woo Chee Hoe Special bonus for consumers of Secrets of Singapore Property Gurus Actually, I can't consider one other resource on the market that teaches you all the points above about Singapore property at such a low value. Can you? Condominium For Sale (D09) – Yong An Park For Lease

In 12 months 2013, c ommercial retails, shoebox residences and mass market properties continued to be the celebrities of the property market. Models are snapped up in report time and at document breaking prices. Builders are having fun with overwhelming demand and patrons need more. We feel that these segments of the property market are booming is a repercussion of the property cooling measures no.6 and no. 7. With additional buyer's stamp responsibility imposed on residential properties, buyers change their focus to commercial and industrial properties. I imagine every property purchasers need their property funding to understand in value.

Loans can also be subcategorized according to whether the debtor is an individual person (consumer) or a business. Common personal loans include mortgage loans, car loans, home equity lines of credit, credit cards, installment loans and payday loans. The credit score of the borrower is a major component in and underwriting and interest rates (APR) of these loans. The monthly payments of personal loans can be decreased by selecting longer payment terms, but overall interest paid increases as well. For car loans in the U.S., the average term was about 60 months in 2009.Template:Fact

Loans to businesses are similar to the above, but also include commercial mortgages and corporate bonds. Underwriting is not based upon credit score but rather credit rating.

Loan payment

The most typical loan payment type is the fully amortizing payment in which each monthly rate has the same value over time.^[4]

The fixed monthly payment P for a loan of L for n months and a monthly interest rate c is:

$P=L\cdot {\frac {c\,(1+c)^{n}}{(1+c)^{n}-1}}$

For more information see "Monthly loan or mortgage payments" under Compound Interest

Abuses in lending

Predatory lending is one form of abuse in the granting of loans. It usually involves granting a loan in order to put the borrower in a position that one can gain advantage over him or her. Where the moneylender is not authorized, they could be considered a loan shark.

Usury is a different form of abuse, where the lender charges excessive interest. In different time periods and cultures the acceptable interest rate has varied, from no interest at all to unlimited interest rates. Credit card companies in some countries have been accused by consumer organizations of lending at usurious interest rates and making money out of frivolous "extra charges".^[5]

Abuses can also take place in the form of the customer abusing the lender by not repaying the loan or with an intent to defraud the lender.

United States taxes

Template:Refimprove section

Most of the basic rules governing how loans are handled for tax purposes in the United States are codified by both Congress (the Internal Revenue Code) and the Treasury Department (Treasury Regulations — another set of rules that interpret the Internal Revenue Code).^[6] Yet such rules are universally accepted.^[7]

1. A loan is not gross income to the borrower.^[8] Since the borrower has the obligation to repay the loan, the borrower has no accession to wealth.^[9]

2. The lender may not deduct (from own gross income) the amount of the loan.^[10] The rationale here is that one asset (the cash) has been converted into a different asset (a promise of repayment).^[11] Deductions are not typically available when an outlay serves to create a new or different asset.^[12]

3. The amount paid to satisfy the loan obligation is not deductible (from own gross income) by the borrower.^[13]

4. Repayment of the loan is not gross income to the lender.^[14] In effect, the promise of repayment is converted back to cash, with no accession to wealth by the lender.^[15]

5. Interest paid to the lender is included in the lender’s gross income.^[16] Interest paid represents compensation for the use of the lender’s money or property and thus represents profit or an accession to wealth to the lender.^[17] Interest income can be attributed to lenders even if the lender doesn’t charge a minimum amount of interest.^[18]

6. Interest paid to the lender may be deductible by the borrower.^[19] In general, interest paid in connection with the borrower’s business activity is deductible, while interest paid on personal loans are not deductible.^[20] The major exception here is interest paid on a home mortgage.^[21]

Income from discharge of indebtedness

Although a loan does not start out as income to the borrower, it becomes income to the borrower if the borrower is discharged of indebtedness. ^[22] Thus, if a debt is discharged, then the borrower essentially has received income equal to the amount of the indebtedness. The Internal Revenue Code lists “Income from Discharge of Indebtedness” in Section 61(a)(12) as a source of gross income.

Example: X owes Y $50,000. If Y discharges the indebtedness, then X no longer owes Y $50,000. For purposes of calculating income, this should be treated the same way as if Y gave X $50,000.

For a more detailed description of the “discharge of indebtedness”, look at Section 108 (Cancellation of Debt (COD) Income) of the Internal Revenue Code.^[23]^[24]

References

43 year old Petroleum Engineer Harry from Deep River, usually spends time with hobbies and interests like renting movies, property developers in singapore new condominium and vehicle racing. Constantly enjoys going to destinations like Camino Real de Tierra Adentro.

Template:Debt

de:Darlehen

↑ Many property agents need to declare for the PIC grant in Singapore. However, not all of them know find out how to do the correct process for getting this PIC scheme from the IRAS. There are a number of steps that you need to do before your software can be approved.

Naturally, you will have to pay a safety deposit and that is usually one month rent for annually of the settlement. That is the place your good religion deposit will likely be taken into account and will kind part or all of your security deposit. Anticipate to have a proportionate amount deducted out of your deposit if something is discovered to be damaged if you move out. It's best to you'll want to test the inventory drawn up by the owner, which can detail all objects in the property and their condition. If you happen to fail to notice any harm not already mentioned within the inventory before transferring in, you danger having to pay for it yourself.

In case you are in search of an actual estate or Singapore property agent on-line, you simply should belief your intuition. It's because you do not know which agent is nice and which agent will not be. Carry out research on several brokers by looking out the internet. As soon as if you end up positive that a selected agent is dependable and reliable, you can choose to utilize his partnerise in finding you a home in Singapore. Most of the time, a property agent is taken into account to be good if he or she locations the contact data on his website. This may mean that the agent does not mind you calling them and asking them any questions relating to new properties in singapore in Singapore. After chatting with them you too can see them in their office after taking an appointment.

Have handed an trade examination i.e Widespread Examination for House Brokers (CEHA) or Actual Property Agency (REA) examination, or equal; Exclusive brokers are extra keen to share listing information thus making certain the widest doable coverage inside the real estate community via Multiple Listings and Networking. Accepting a severe provide is simpler since your agent is totally conscious of all advertising activity related with your property. This reduces your having to check with a number of agents for some other offers. Price control is easily achieved. Paint work in good restore-discuss with your Property Marketing consultant if main works are still to be done. Softening in residential property prices proceed, led by 2.8 per cent decline within the index for Remainder of Central Region

Once you place down the one per cent choice price to carry down a non-public property, it's important to accept its situation as it is whenever you move in – faulty air-con, choked rest room and all. Get round this by asking your agent to incorporate a ultimate inspection clause within the possibility-to-buy letter. HDB flat patrons routinely take pleasure in this security net. "There's a ultimate inspection of the property two days before the completion of all HDB transactions. If the air-con is defective, you can request the seller to repair it," says Kelvin.

15.6.1 As the agent is an intermediary, generally, as soon as the principal and third party are introduced right into a contractual relationship, the agent drops out of the image, subject to any problems with remuneration or indemnification that he could have against the principal, and extra exceptionally, against the third occasion. Generally, agents are entitled to be indemnified for all liabilities reasonably incurred within the execution of the brokers´ authority.

To achieve the very best outcomes, you must be always updated on market situations, including past transaction information and reliable projections. You could review and examine comparable homes that are currently available in the market, especially these which have been sold or not bought up to now six months. You'll be able to see a pattern of such report by clicking here It's essential to defend yourself in opposition to unscrupulous patrons. They are often very skilled in using highly unethical and manipulative techniques to try and lure you into a lure. That you must also protect your self, your loved ones, and personal belongings as you'll be serving many strangers in your home. Sign a listing itemizing of all of the objects provided by the proprietor, together with their situation. HSR Prime Recruiter 2010
↑ Subsidized Loan - Definition and Overview at About.com. Retrieved 2011-12-21.
↑ Concessional Loans, Glossary of Statistical Terms, oecd.org, Retrieved on 5/5/2013
↑ Template:Cite news
↑ Credit card holders pay Rs 6,000 cr 'extra' May 3, 2007
↑ Samuel A. Donaldson, Federal Income Taxation of Individuals: Cases, Problems and Materials, 2nd Ed. 111 (2007).
↑ Id.
↑ Id.
↑ Id. See Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955)(giving the three-prong standard for what is "income" for tax purposes: (1) accession to wealth, (2) clearly realized, (3) over which the taxpayer has complete dominion).
↑ Donaldson, at 111.
↑ Id.
↑ Id.
↑ Id.
↑ Id.
↑ Id.
↑ Id.; 26 U.S.C. 61(a)(4)(2007).
↑ Id.
↑ Id. at 112.
↑ Id.
↑ Id.
↑ Id.
↑ Id.; 26 U.S.C. 61(a)(12)(2007).
↑ Id.; 26 U.S.C. 108(2007).
↑ EUGENE A. LUDWIG AND PAUL A. VOLCKER, 16 November 2012 Banks Need Long-Term Rainy Day Funds, Start reading from smallloansfor12months.co.uk

[Signoriello1991-1] Many property agents need to declare for the PIC grant in Singapore. However, not all of them know find out how to do the correct process for getting this PIC scheme from the IRAS. There are a number of steps that you need to do before your software can be approved.

Naturally, you will have to pay a safety deposit and that is usually one month rent for annually of the settlement. That is the place your good religion deposit will likely be taken into account and will kind part or all of your security deposit. Anticipate to have a proportionate amount deducted out of your deposit if something is discovered to be damaged if you move out. It's best to you'll want to test the inventory drawn up by the owner, which can detail all objects in the property and their condition. If you happen to fail to notice any harm not already mentioned within the inventory before transferring in, you danger having to pay for it yourself.

In case you are in search of an actual estate or Singapore property agent on-line, you simply should belief your intuition. It's because you do not know which agent is nice and which agent will not be. Carry out research on several brokers by looking out the internet. As soon as if you end up positive that a selected agent is dependable and reliable, you can choose to utilize his partnerise in finding you a home in Singapore. Most of the time, a property agent is taken into account to be good if he or she locations the contact data on his website. This may mean that the agent does not mind you calling them and asking them any questions relating to new properties in singapore in Singapore. After chatting with them you too can see them in their office after taking an appointment.

Have handed an trade examination i.e Widespread Examination for House Brokers (CEHA) or Actual Property Agency (REA) examination, or equal; Exclusive brokers are extra keen to share listing information thus making certain the widest doable coverage inside the real estate community via Multiple Listings and Networking. Accepting a severe provide is simpler since your agent is totally conscious of all advertising activity related with your property. This reduces your having to check with a number of agents for some other offers. Price control is easily achieved. Paint work in good restore-discuss with your Property Marketing consultant if main works are still to be done. Softening in residential property prices proceed, led by 2.8 per cent decline within the index for Remainder of Central Region

Once you place down the one per cent choice price to carry down a non-public property, it's important to accept its situation as it is whenever you move in – faulty air-con, choked rest room and all. Get round this by asking your agent to incorporate a ultimate inspection clause within the possibility-to-buy letter. HDB flat patrons routinely take pleasure in this security net. "There's a ultimate inspection of the property two days before the completion of all HDB transactions. If the air-con is defective, you can request the seller to repair it," says Kelvin.

15.6.1 As the agent is an intermediary, generally, as soon as the principal and third party are introduced right into a contractual relationship, the agent drops out of the image, subject to any problems with remuneration or indemnification that he could have against the principal, and extra exceptionally, against the third occasion. Generally, agents are entitled to be indemnified for all liabilities reasonably incurred within the execution of the brokers´ authority.

To achieve the very best outcomes, you must be always updated on market situations, including past transaction information and reliable projections. You could review and examine comparable homes that are currently available in the market, especially these which have been sold or not bought up to now six months. You'll be able to see a pattern of such report by clicking here It's essential to defend yourself in opposition to unscrupulous patrons. They are often very skilled in using highly unethical and manipulative techniques to try and lure you into a lure. That you must also protect your self, your loved ones, and personal belongings as you'll be serving many strangers in your home. Sign a listing itemizing of all of the objects provided by the proprietor, together with their situation. HSR Prime Recruiter 2010

[2] Subsidized Loan - Definition and Overview at About.com. Retrieved 2011-12-21.

[3] Concessional Loans, Glossary of Statistical Terms, oecd.org, Retrieved on 5/5/2013

[4] Template:Cite news

[5] Credit card holders pay Rs 6,000 cr 'extra' May 3, 2007

[6] Samuel A. Donaldson, Federal Income Taxation of Individuals: Cases, Problems and Materials, 2nd Ed. 111 (2007).

[7] Id.

[8] Id.

[9] Id. See Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955)(giving the three-prong standard for what is "income" for tax purposes: (1) accession to wealth, (2) clearly realized, (3) over which the taxpayer has complete dominion).

[10] Donaldson, at 111.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] Id.; 26 U.S.C. 61(a)(4)(2007).

[17] Id.

[18] Id. at 112.

[19] Id.

[20] Id.

[21] Id.

[22] Id.; 26 U.S.C. 61(a)(12)(2007).

[23] Id.; 26 U.S.C. 108(2007).

[24] EUGENE A. LUDWIG AND PAUL A. VOLCKER, 16 November 2012 Banks Need Long-Term Rainy Day Funds, Start reading from smallloansfor12months.co.uk

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[17]

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[23]

[24]

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+In finance, a '''loan''' is a [[debt]] evidenced by a [[Promissory note|note]] which specifies, among other things, the principal amount, interest rate, and date of repayment. A loan entails the reallocation of the subject [[asset]](s) for a period of time, between the [[wiktionary:lender|lender]] and the [[wiktionary:borrower|borrower]].
+In a loan, the borrower initially receives or ''borrows'' an amount of [[money]], called the ''principal'', from the lender, and is obligated to ''pay back'' or ''repay'' an equal amount of money to the lender at a later time. Typically, the money is paid back in regular ''installments'', or partial repayments; in an [[annuity (finance theory)|annuity]], each installment is the same amount.
+The loan is generally provided at a cost, referred to as [[interest]] on the [[debt]], which provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by [[contract]], which can also place the borrower under additional restrictions known as [[loan covenant]]s. Although this article focuses on monetary loans, in practice any material object might be lent.
+Acting as a provider of loans is one of the principal tasks for [[financial institution]]s. For other institutions, issuing of [[debt]] contracts such as [[bond (finance)|bonds]] is a typical source of funding.
+==Types of loans==
+===Secured===
+{{See also|Loan guarantee}}
+A [[secured loan]] is a loan in which the borrower [[Pledge (law)|pledges]] some asset (e.g. a car or property) as [[Collateral (finance)|collateral]].
+A [[mortgage loan]] is a very common type of debt instrument, used by many individuals to purchase [[house|housing]].  In this arrangement, the money is used to purchase the property.  The financial institution, however, is given security — a [[lien]] on the title to the house — until the mortgage is paid off in full.  If the borrower [[Default (finance)|defaults]] on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.
+In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter — often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer.
+===Unsecured===
+Unsecured loans are monetary loans that are not secured against the borrower's assets. These may be available from financial institutions under many different guises or marketing packages:
+* [[credit card]] debt
+* personal loans
+* [[bank]] [[overdraft]]s
+* credit facilities or lines of credit
+* [[corporate bond]]s (may be secured or unsecured)
+The [[interest rate]]s applicable to these different forms may vary depending on the lender and the borrower.  These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the [[Consumer Credit Act 1974]].
+Interest rates on unsecured loans are nearly always higher than for secured loans, because an unsecured lender's options for recourse against the borrower in the event of default are severely limited. An unsecured lender must sue the borrower, obtain a money judgment for breach of contract, and then pursue execution of the judgment against the borrower's unencumbered assets (that is, the ones not already pledged to secured lenders). In insolvency proceedings, secured lenders traditionally have priority over unsecured lenders when a court divides up the borrower's assets. Thus, a higher interest rate reflects the additional risk that in the event of insolvency, the debt may be uncollectible.
+===Demand===
+Demand loans are short term loans <ref name=Signoriello1991>{{Citation
+ | title = Commercial Loan Practices and Operations
+ | year = 1991
+ | author = Signoriello, Vincent J.
+ | isbn = 978-1-55520-134-0
+}}</ref> that are atypical in that they do not have fixed dates for repayment and carry a floating interest rate which varies according to the prime rate. They can be "called" for repayment by the lending institution at any time. Demand loans may be unsecured or secured.
+===Subsidized{{anchor|Subsidized loan}}===
+A subsidized loan is a loan on which the interest is reduced by an explicit or hidden [[subsidy]]. In the context of college loans in the [[United States]], it refers to a loan on which no interest is accrued while a student remains enrolled in education.<ref>[http://collegesavings.about.com/od/glossarydefinitions/g/subsidized-loan.htm Subsidized Loan - Definition and Overview] at ''[[About.com]]''. Retrieved 2011-12-21.</ref>
+===Concessional===
+A concessional loan, sometimes called a "soft loan," is granted on terms substantially more generous than market loans either through below-market interest rates, by grace periods or a combination of both.<ref>[http://stats.oecd.org/glossary/detail.asp?ID=5901 Concessional Loans, Glossary of Statistical Terms], [[Organisation for Economic Co-operation and Development|oecd.org]], Retrieved on 5/5/2013</ref>  Such loans may be made by foreign governments to poor countries or may be offered to employees of lending institutions as an employee benefit.
+==Target markets==
+===Personal or commercial===
+{{See also|Credit_(finance)#Consumer_credit}}
+Loans can also be subcategorized according to whether the debtor is an individual person (consumer) or a business. Common personal loans include [[mortgage loan]]s, car loans, home equity lines of credit, [[credit card]]s, [[installment loan]]s and [[payday lending|payday loan]]s. The [[credit score]] of the borrower is a major component in and underwriting and interest rates ([[APR]]) of these loans. The monthly payments of personal loans can be decreased by selecting longer payment terms, but overall interest paid increases as well. For car loans in the U.S., the average term was about 60 months in 2009.{{Fact|date=October 2013}}
+Loans to businesses are similar to the above, but also include [[commercial mortgage]]s and [[corporate bond]]s. Underwriting is not based upon credit score but rather [[credit rating]].
+==Loan payment==
+The most typical loan payment type is the fully amortizing payment in which each monthly rate has the same value over time.<ref>{{cite news| url=http://www.washingtonpost.com/wp-dyn/content/article/2007/10/05/AR2007100501165.html | work=The Washington Post | title=The Math Behind Your Home Loan | first=Jack | last=Guttentag | date=October 6, 2007 | accessdate=May 11, 2010}}</ref>
+The fixed monthly payment '''P''' for a loan of '''L''' for '''n''' months and a monthly interest rate '''c''' is:
+<math>P = L \cdot \frac{c\,(1 + c)^n}{(1 + c)^n - 1}</math>
+For more information see "Monthly loan or mortgage payments" under [[Compound Interest]]
+==Abuses in lending==
+[[Predatory lending]] is one form of abuse in the granting of loans.  It usually involves granting a loan in order to put the borrower in a position that one can gain advantage over him or her. Where the moneylender is not authorized, they could be considered a [[loan shark]].
+[[Usury]] is a different form of abuse, where the lender charges excessive interest. In different time periods and cultures the acceptable interest rate has varied, from no interest at all to unlimited interest rates. Credit card companies in some countries have been accused by consumer organizations of lending at usurious interest rates and making money out of frivolous "extra charges".<ref>[http://www.financialexpress.com/latest_full_story.php?content_id=163028 Credit card holders pay Rs 6,000 cr 'extra'] May 3, 2007</ref>
+Abuses can also take place in the form of the customer abusing the lender by not repaying the loan or with an intent to defraud the lender.
+==United States taxes==
+{{Refimprove section|{{subst:February 2012}}|date=February 2012}}
+Most of the basic rules governing how loans are handled for tax purposes in the United States are codified by both Congress (the Internal Revenue Code) and the Treasury Department (Treasury Regulations — another set of rules that interpret the Internal Revenue Code).<ref>Samuel A. Donaldson, Federal Income Taxation of Individuals: Cases, Problems and Materials, 2nd Ed. 111 (2007).</ref>  Yet such rules are universally accepted.<ref>''Id.''</ref>
+'''.	A loan is not gross income to the borrower.'''<ref>''Id.''</ref>  Since the borrower has the obligation to repay the loan, the borrower has no accession to wealth.<ref>''Id.''  ''See Commissioner v. Glenshaw Glass Co.'', 348 U.S. 426 (1955)(giving the three-prong standard for what is "income" for tax purposes: (1) accession to wealth, (2) clearly realized, (3) over which the taxpayer has complete dominion).</ref>
+'''2.	The lender may not deduct (from own gross income) the amount of the loan.'''<ref>Donaldson, at 111.</ref>  The rationale here is that one asset (the cash) has been converted into a different asset (a promise of repayment).<ref>''Id.''</ref>  Deductions are not typically available when an outlay serves to create a new or different asset.<ref>''Id.''</ref>
+'''3.	The amount paid to satisfy the loan obligation is not deductible (from own gross income) by the borrower.'''<ref>''Id.''</ref>
+'''4.	Repayment of the loan is not gross income to the lender.'''<ref>''Id.''</ref>  In effect, the promise of repayment is converted back to cash, with no accession to wealth by the lender.<ref>''Id.''</ref>
+'''5.	Interest paid to the lender is included in the lender’s gross income.'''<ref>''Id.''; 26 U.S.C. 61(a)(4)(2007).</ref>  Interest paid represents compensation for the use of the lender’s money or property and thus represents profit or an accession to wealth to the lender.<ref>''Id.''</ref>  Interest income can be attributed to lenders even if the lender doesn’t charge a minimum amount of interest.<ref>''Id. at 112.''</ref>
+'''6.	Interest paid to the lender may be deductible by the borrower.'''<ref>''Id.''</ref>  In general, interest paid in connection with the borrower’s business activity is deductible, while interest paid on personal loans are not deductible.<ref>''Id.''</ref>  The major exception here is interest paid on a home mortgage.<ref>''Id.''</ref>
+==Income from discharge of indebtedness==
+Although a loan does not start out as income to the borrower, it becomes income to the borrower if the borrower is discharged of indebtedness.  '''<ref>''Id.''; 26 U.S.C. 61(a)(12)(2007).</ref>  Thus, if a debt is discharged, then the borrower essentially has received income equal to the amount of the indebtedness.  The [[Internal Revenue Code]] lists “Income from Discharge of Indebtedness” in Section 61(a)(12) as a source of [[gross income]].
+Example: X owes Y $50,000.  If Y discharges the indebtedness, then X no longer owes Y $50,000.  For purposes of calculating income, this should be treated the same way as if Y gave X $50,000.
+For a more detailed description of the “discharge of indebtedness”, look at Section 108 ([[Cancellation of Debt (COD) Income]]) of the [[Internal Revenue Code]].'''<ref>''Id.''; 26 U.S.C. 108(2007).</ref><ref>EUGENE A. LUDWIG AND PAUL A. VOLCKER, 16 November 2012 [http://online.wsj.com/article/SB10001424127887324556304578120721147710286.html?mod=googlenews_wsj Banks Need Long-Term Rainy Day Funds], Start reading from smallloansfor12months.co.uk</ref>
+==See also==
+* [[Finance]], [[Personal finance]], [[Settlement (finance)]]
+* [[Debt]], [[Consumer debt]], [[Debt consolidation]], [[Government debt]]
+* [[Bank]], [[Fractional-reserve banking]], [[Building society]]
+* [[Annual percentage rate]] (a.k.a. [[Effective annual rate]])
+* [[Default (finance)]]
+* [[Interest-only loan]], [[Negative amortization]], [[PIK loan]]
+* [[Leveraged loan]]
+* [[Loan guarantee]]
+* [[Loan sale]]
+* [[Payday loan]]
+* [[Refund Anticipation Loan]]
+* [[Student loan]]
+* [[Syndicated loan]]
+* [[Title loan]]
+* [[Legal financing]]
+* [[Pay it forward]]
+'''US specific:'''
+* [[FAFSA]]
+* [[Federal student loan consolidation]]
+* [[Federal Perkins Loan]]
+* [[George D. Sax]] and the Exchange National Bank of Chicago - Innovation of instant loans
+* [[Stafford loan]]
+* [[Student loan default]]
+==References==
+{{Reflist}}
+{{Debt}}
+[[Category:Loans]]
+[[Category:Banking terms]]
+[[de:Darlehen]]

Eddington luminosity: Difference between revisions

Revision as of 12:29, 11 December 2013

Contents

Types of loans

Secured

Unsecured

Demand

Subsidized`<Subsidized loan>...</Subsidized loan>`

Concessional

Target markets

Personal or commercial

Loan payment

Abuses in lending

United States taxes

Income from discharge of indebtedness

See also

References

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Eddington luminosity: Difference between revisions

Revision as of 12:29, 11 December 2013

Types of loans

Secured

Unsecured

Demand

Subsidized<Subsidized loan>...</Subsidized loan>

Concessional

Target markets

Personal or commercial

Loan payment

Abuses in lending

United States taxes

Income from discharge of indebtedness

See also

References

Navigation menu

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Subsidized`<Subsidized loan>...</Subsidized loan>`