Getting Money When You Need it
Getting Money When You Need it
Getting Money When You Need it
In this world, money is probably the most important thing to a lot of people. Money is exchanged for goods and services necessary for a comfortable life. People get their money through various means, ensuring that they will be able to pay the bills and buy food for their next meal. The abundance (or lack of) money dictates how a person will get through every passing day.
However, there are times when people need to pay for something, but they do not have enough money to pay for it, such as during an accident. In these circumstances, people borrow money so they will be able to pay the required amount. This act of borrowing money is called getting a "loan".
When people get a loan, they instantly get the money they ask for. This borrowed money is called a "principal". People are required to return the principal in the future. Most people pay back the principal in smaller increments called "installments", although payment in full is not uncommon.
To make sure that the borrower will pay back the borrowed amount of money, a lender could ask for something, such as a car or television, in case the borrower fails to return the borrowed money after a given time. This property is called "collateral", and is common in loans involving large sums of money. There are cases in which a lender loans money without collateral. Loans like these are called unsecured loans.
For loans involving smaller amounts of money, people usually ask friends or relatives for unsecured loans. This type of loan is the simplest kind of loan that people can make. Documentation of such kind of loans is usually in the form of an IOU stating the amount and when the loan can be repaid.
Another way to obtain unsecured loans is by using credit cards. When people use their credit cards, each charge is expected to be paid in the future, and the user signs a payment authorization form before a charge is made. Credit card companies put a limit to the amount of money being charged from a credit card to prevent excessive amounts of purchases that the user might not be able to pay back.
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