Decoding Financial Gobbledygook

Thank heavens that websites take care to explain to us the meanings of financial terms. They have made life so much less puzzling for all those lesser mortals who find it so tough to understand (so-called) simple ideas like redemption penalties, collateral, secured homeowner loans, unsecured loans, and so on. I no longer have to look to friends in the finance field to advise me on what loans to take and what not to. The world being driven by the cyber world these days, everybody has to learn to think for themselves. It was while trying to sift through the financial jargon that passes for English on the cyber world that I found the answers to most of my questions. Of course, I had to look through almost a dozen different websites and spend a couple of hours before finally reaching a complete understanding of the words that loan companies try to get our business with.

For starters, I did discover the difference between secured homeowner loans and unsecured loans. Now, secured loans of any kind are usually secured against some asset. Most times, this asset is a home. On the other hand, unsecured loans need no such security, which is one reason why the time taken to get hold of an unsecured loan is diminished significantly. After all, you could be giving the name of any property anywhere in the world and pretending that it is your own. Obviously, that is not going to work. So, you have to provide a zillion plus documents to prove to the loan providers, that the property is your own. Most people who already own homes resort to secured homeowner loans because, in spite of the paperwork required, such loans are easily got.

I also finally understood what was meant by the term "collateral" (also a Tom Cruise movie). "Collateral" basically is the term used to mean "security". So the house that secures the loan for you, works as your collateral. If you are unable to repay the loan on time, you will have no choice but to bid goodbye to your home.

With respect to an unsecured loan, it becomes easier to get one if you have a good credit history. People who do not have a history of good credit are usually treated like prodigal sons. They are made to pay quite a high rate of interest, getting loans is that much more bewildering, and in general, even getting a loan is a task and a half. But now that you have understood some of the ideas, acquiring a loan will become much less difficult.

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