Loans are lent to individuals or companies by banks or other financial institutions to financially manage planned or unplanned events in the foreseeable future. With the borrower having to pay for the principal amount and interest over a period of time, these loans are used by borrowers to grow overall money supply. Loans can be classified into secured and unsecured, open-end and closed-end, and conventional types. Types of loans include personal loans, cash advances, student loans, mortgage loans, home equity loans, and small business loans, with things to be considered involving credit score and credit history, income, and monthly obligations.

  • Loans are not classified as securities - they are private contracts between borrowers and lenders
  • Loans typically trade in increments of one million dollars
  • Loans are higher on the subordination stack than bonds
  • Loans are typically illiquid - they are difficult to quickly sell, trade or settle
  • Typically transferred between buyers and sellers via assignments or participation agreements.