How Do Loans Work?

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Loans allow people to make large purchases, while also allowing banks to make a profit through interest on the loans. Find out what is required to get a business or personal loan with information from a registered financial consultant in this free video on loans.

Part of the Video Series: Money Management
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Video Transcript

This is Patrick Munro talking about, "How do loans work?" Loans are a instrument that banks will use to bring in profit. Loans are what drives and economic engine in America. Most people do not have the large amount of cash available for important purchases such as automobiles, homes, and business ventures. So with that in mind loans come into play and of course credit worthiness is one of the major components of achieving a loan. And a loan of course has to have a business plan if it's a commercial entity and of course if you are a individual you need to have your financial affairs in order, which means your asset sheets, your liabilities sheets and various things that a banker is going to look at to make a credit lending decision. Loans are... various interest rates put upon them by the financial institution and that interest rate is the profit that they will make when they grant you the loan. This is Patrick Munro talking about, "How do loans work?"


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