In the symphony of life, love, family, and money play harmonious roles. It is within the realm of financial wisdom that we must discern how to utilise money, investments, assets, and property to chart a course towards our financial objectives. While the ability to indulge in our desires with financial abundance is certainly gratifying, we often encounter circumstances where immediate affordability eludes us.
In such times, financial institutions, notably banks, offer an array of schemes designed to empower the community to achieve their lifestyle requirements in a sustainable manner. These services encompass a diverse range of offerings that fall under the broad spectrum of products provided by banks.
Borrowing
At its core, a loan is a sum of money borrowed for a specified period, accompanied by a predetermined plan for repayment with competitive interest rates levied, which can be either be a fixed rate or a floating rate. While this amount contributes to the overall amount borrowed, it is repaid to the lending institution over the course of the instalment plan.
The structures for loans can exhibit variances according to product categories and lending arrangements. Loans prove particularly invaluable for endeavours such as home construction or the expansion of a business. Such substantial financial requirements can be categorised as personal, professional, or corporate loans that are tailored to meet the distinct needs of individuals, entrepreneurs, and enterprises alike.
What is financing?
Financing, in essence, represents the art of procuring funds for a wide array of expenditures. This can encompass the direction of financial resources through avenues like commercial bank loans, overdrafts, or channelling credit from various sources to fuel a specific project’s financial needs. It further encompasses the transfer of funds from one account to another, the initiation of an Initial Public Offering (IPO) to attract public investment, and the engagement of personal investors. Government initiatives also play a role, providing funding incentives to nurture mutually beneficial sectors at favourable interest rates. Even informal sources, such as borrowing from family or friends, fall under the umbrella of financing, while angel investors and hire-purchase loans align within the same spectrum.
What is leasing in financial terms?
Traditionally, leasing conveys the concept of hiring or renting, yet within the financial service sector, particularly concerning vehicles, both ‘finance’ and ‘leasing’ often serve as interchangeable terms conveying a similar meaning. It denotes a contractual agreement between two parties, permitting one to gain access to an item with the option to purchase it—a transaction akin to a rental arrangement. The crucial distinction, however, lies in the fact that, through this process, ownership of the item ultimately rests in the individual once the agreed-upon instalment payments are completed.
What is an overdraft facility?
An overdraft (OD) facility, often regarded as one of the most prevalent forms of informal loans extended by banks, offers a flexible financial lifeline. This facility can be either secured or unsecured, entailing an interest rate, and is attached to an existing bank account. Secured ODs necessitate collateral as security, whereas unsecured ODs are granted based on the relationship with the bank. Once authorised, this facility grants accessibility for payments through various channels, including cheques, online transfers, and ATM withdrawals.
It reflects as a negative balance on a bank statement and automatically rectifies itself as soon as funds are deposited. Interest is charged on utilization and the time period. OD facilities can be aligned with an existing savings deposit, such as a fixed deposit, enabling you to leverage the extent of your savings without prematurely withdrawing them.
Business loans vs. personal loans
Prudent financial management entails a clear division between personal and business finances, allowing you to reap the distinct advantages each realm offers.
Personal loans find their utility in addressing critical needs like medical emergencies, funding weddings, or supporting education. On the other hand, business loans are tailor-made for bolstering business operations, spanning investments in machinery, expanding premises, or augmenting your workforce.
Progressive financial institutions, such as NDB Bank, present an array of specialised loan schemes to cater to specific needs. These encompass Solar Vantage Loans for investing in domestic solar energy, Pawning for obtaining cash against jewellery, Araliya designed for women entrepreneurs, Business Loans under the ‘Jayagamu Sri Lanka’ initiative, home loans, personal loans, and educational loans.
Each of these loan offerings is structured to cater to the unique requirements of customers, featuring diverse benefits, terms, and conditions. In your pursuit of financial support, it is pivotal to explore product-specific loans with your chosen bank to secure the most advantageous borrowing arrangement.
