Articlr

When the concept of banking first arrived on the scene, a bank was viewed as a place where people could deposit their money in order to keep it safe. This was the premise of the most ancient of the banks.

But the person who came up with the idea of a bank loan - or a bank that loans out money to people for an interest charge, can be credited with the most important inventions of all time.

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.

Nobody in the present day and age (unless they are born to money) has enough money lying around to make big ticket purchases like a condo or house, without having to resort to a bank loan.

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.

And then of course, there are student bank loans. There are bank loans that will help you buy a car. And again, there are bank loans that will help you buy computers, washing machines and other consumer goods.

Yes, even a credit card is a bank loan, and is one of the reasons why our society is so mired in debt. This trend for unsecured debt has shown up in other ways with debt consolidation loans - taking out a loan to pay off other loans at higher interest rates or higher monthly payments is a thriving business.

Bank loans issued to individuals for the purpose of housing are probably the vast majority of loans issued by banks. But they may not compare in volume or value to bank loans issued to businesses worldwide.

To give a sense of perspective, the total business loans issued are 99.99% of all the debt issued in the world. And are one reason why the financial bailout of the investment banks was such a high priority to Congress.

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