What are loans?
How do banks make money?
- Selling fish
- Trading goods
- Offering time travel
Too easy for you? But can you explain the detail?
How do you make money? You buy products low, and sell them high, right?
Banks do the same.
They raise money as deposit or borrow from different banks or investors with lower interest, and offer loans with higher interest.
Additionally they charge some fees for payments.
In other words, they use our money for other people.
This is how banks circulate “the blood flow” in our economic activities.
What kinds of loans can we get?
There are many kinds of loans; loans for daily purchase, cars, houses, businesses, farming and so on.
When you don’t have enough saving but really want to afford a new dream home for your family, there are home loans for you to consider.
When your company doesn’t have much income now but is planning to generate in the near future, business loans help you sustain your business.
If you want to buy an agricultural machinery to grow more rice effectively, try farming loans.
Without loans, our lives would be inconvenient.
Imagine loans are like time travel. You buy things first with not enough money and pay later with interest.
But can everyone borrow money?
Can we borrow money as much as we want?