Monthly Archives: May 2010

Loans: Long term v/s Short term Part II

Please read Part I

For this purpose banks want to get the money back as soon as possible. If you observe the chain of events, if say one or two defaults still bank will not be losing a great deal of money, its profit might come down a bit. Then why does bank gives long term loans for home loans? It is very logical for the banks to do this. The banks keep the interest rates low for home loans in order to lure the customers and ensure that they get a huge customer base. If many customers are lured to this home loan then they are in great profits. Continue reading

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Loans: Long term v/s Short term Part I

Loans are very common these days. There are various kinds of loans; most common ones are Housing loan, Personal loan, Educational loan, Credit Card loan and Vehicle loan.  Except the housing loan most of the loans have a short term period for repayment. It is very critical for the banks to get the money back from the borrowers and ensure the smooth working of the banks. When bank can make more money by giving it for long term why does it prefer to keep the term short for other loans other than the housing loan? Continue reading

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