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Yes business loans have higher rates as the risk involved with business is more than personal loan
Thanks for invitation,
Yes of course, as the business loans bearing risks rate higher than the personal loans, therefore, bussiness loan needs much more banking services in order to mitigate such risks, than the personal loan.
Dear Maya,
Retail Loans (Include loans for personal needs, buying a vehicle, house loans etc):
1. Generally offered to Individual customers like Mr.A or Mr.B which basically known as a natural person.
2. For granting such kind of loans banks generally, have salary or wages of the individual as security. Now the Rate of Interest (ROI) depends on the criteria that with which company the individual is working or who is the employer of that individual. For Example: If individual working with a company which is listed with the banker as safe corporate /Good corporate, then ROI is lower for such individual borrower. If the company is classified within the low category with the banker then ROI for such individual borrower may b higher.
3. For Vechile loans banks mortgages the Vehicle the individual borrower is supposed to buy out of that loan. In this case if the borrower fails to repay the loan then banker may recover the loan by selling the vehicle acuired out of that loan. So in this case the bank has sufficient seciurity with them for recovering the unpaid loan amount. So the ROI in this case is lower as compared to Personal loan. Same is also the case with the Home loans.
There are other kind of products in the market where the individual can borrow money from the banker. Like Loan against the property. which is basically for self employed individuals.
Corporate Loans:
1. There are different types of corporate loans like CC, OD and Term Loan facility.
2. These products are generally offered to corporates based on the corporate guarantess or against property.
3. ROI in this depends on the Financials of the corporate and kind of security the corporate is offering. SO better the Financials and security lower will be ROI and vice versa.
Conclusion:
So the ROI in all the cases depends on the different products offered by the banks, the creditability of the customer and the risk factor involved in all the cases.
So its not that business loans are higher than personal loans. It all depends on the factors listed above.
Hope you are satisfied with the answer.
Thanks
Personal loans such as buying a car or even a house .. Loans are limited to people and continuity of work only so the interest rates are sometimes a large guarantee and other loans for loans are a contribution and a product and a large economic support .. So investment loans are the highest rate of personal loans that It is useful only to the person himself
Personal loans
These loans, which are intended for consumer use such as buying a car, furniture, refrigerator or television, some banks do not like giving loans to employees to buy such durable goods, because the ability of the employee to pay depends on the continuation of the job where it can affectThe banks usually demand a higher interest rate on consumer loans because they involve a higher degree of risk. Consumer loans may be guaranteed by salary, jewelry, jewelry, etc.
Investment Loans
These loans are the purpose of which is the productive use of any purpose for the purpose of increasing production or increase sales as the purchase of raw materials or purchase machinery to support the production capacity of the company and encourage central banks usually commercial banks to give loans for productive purposes, because this support the national economy and interest less Of personal loans
