Bank Loan Variety Fuels Modern Finance

Banks originated as an alternative to burying your money in a clay pot out in the sheepfold. In most ancient records, the concept of a bank as anything other than a communal effort to protect wealth from raiders is spotty.

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.

The practice of charging interest is what makes banks work. A lot of people's first encounter with a bank is with a savings deposit book; their second is with a some sort of loan, and this proves to be the tie that binds.

In fact, my first loan was for the purchase of my first new car. After this, I took a home mortgage loan to purchase a condo.

These are two worthy topics for taking out loans; nobody has the cash lying around to pay for either a college education or a home full stop from cash on their person.

These mortgages are usually made with low interest and long repayment terms (it works out nicely for both parties that way), with payment terms that run for 10 to 30 years depending on the loan.

Beyond secured auto and mortgage loans, banks also issue personal loans. These are for consumers to pay for any number of things - ranging from medical emergencies to marriages to vacations. Any time where you need to pay for something suddenly and don't have the cash on hand is a candidate for this type of loan product.

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.

The most common kind of bank loan is one you carry in your wallet. It's your credit card. Yes, even a credit card is a bank loan. Many banks even offer consolidation loans to pay off your credit card debt.

All of these consumer bank loans, mortgages included, are nothing compared to the banking transactions build on inter-business lending.

Whether it is a small business operated out of the home or a large business that needs millions of dollars in order to tide over a cash flow problem or to acquire assets, banks loans issued to businesses far outstrip individual bank loans.

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