CHAPTER 1INTRODUCTION:- A bank is an institution that deals with money and credit.Different people understand the meaning of a bank in different ways.For a common man bank means a storehouse where money is stored;for a businessman it is a financial institution and for day to day customer it is an institution where he can deposit his savings. In reality banks are service organization selling banking service. Banks play an important role in the economy of any country as they hold the saving of the public.provide means of payment for goods and services and provide necessary finace for the development of business and trade. Thus bank is a link in the flow of funds from savers to the user.Hence they should render an efficient customer service in order to retain the present customers and also to attract the potential customers.DEFINITION :- Oxford Dictionary defines a bank as an establishment for custody of money,which it pays out on customers order. Indian Banking Regulation Act,1949 defines banking company as a company which transacts the business of banking in India.Functions of bank:- The function of bank are as follows;

Primary functions:-Commercial banks perform various functions: Commercial banks accept various types of deposits from public especially from its clients, including saving account deposits, recurring account deposits, and fixed deposits. These deposits are payable after a certain time period Commercial banks provide loans and advances of various forms, including anoverdraftfacility, cash credit, bill discounting, money at call etc. They also give demand and demand and term loans to all types of clients against proper security. Credit creation is the most significant function of commercial banks. While sanctioning a loan to a customer, they do not provide cash to the borrower. Instead, they open a deposit account from which the borrower can withdraw. In other words, while sanctioning a loan, they automatically create deposits, known as a credit creation from commercial banks.

Secondary functions:-Along with primary functions, commercial banks perform several secondary functions. The secondary functions of commercial banks can be divided into agency functions and utility functions.Agency functions include: To collect and clear cheques, dividends and interest warrant. To make payments of rent, insurance premium, etc. To deal in foreign exchange transactions. To purchase and sell securities. To act as trustee, attorney, correspondent and executor. To accept tax proceeds and tax returns.Utility functions include: To provide safety locker facility to customers. To provide money transfer facility. To issue traveller's cheque. To act as referees. To accept various bills for payment: phone bills, gas bills, water bills, etc. To provide merchant banking facility. To provide various cards: credit cards, debit cards, smart cards, etc.What Is Loan:-

Loan contracts come in all kinds of forms and with varied terms, ranging from simple promissory notes between friends and family members to more complex loans like mortgage, auto, payday and student loans. Banks, credit unions and other people lend money for significant, but necessary items like a car, student loan or home. Other loans, like small business loans and loans from the Department of Veterans Affairs, are only available to select groups of people. And two atypical loans are payday loans and loans from a retirement account. Regardless of type, every loan and its conditions for repayment is governed by state and federal guidelines to protect consumersfrom unsavory practices like excessive interest rates. In addition, loan lengthand default terms should be clearly detailed to avoid confusion or potential legal action. In case of default, terms of collection of the outstanding debt should clearly specify the costs involved in collecting upon the debt. This also applies to parties of promissory notes as well. If you are in need of money for an essential item or to help make your life more manageable, its a good thing to familiarize yourself with the kinds of credit and loans that might be available to you and the sorts of terms you can expect. Here are some of the different types of loans; Agriculture loan - Agricultural loans are available for a multitude of farming purposes. Farmers may apply for loans to buy inputs for the cultivation of food grain crops as well as for horticulture, aquaculture, animal husbandry, floriculture and sericulture businesses. There are also special loans to finance the purchase of agricultural machinery such as tractors, harvesters and trucks. Construction of biogas plants and irrigation systems as well as the purchase of agricultural land may also be financed through special types of agricultural finance. Personal Loan - It is the loan granted to fulfill your expenses which ranges from buying some expensive electronic gadgets to booking your air ticketsYes people used to use this facility for anything they can. They forget that usually rate of interest on such loans will be higher than other types of loans. But still to have something in advance end up them to borrower of such type of loans.

Here we may find two types of loansSecured Loans-Where you provide somecollateral as a safety against loans.Unsecured Loans-In such type of loans borrower collateral not required. Education Loan - This is actually a handy tool for parents who not planned well for their kids higher education. Home Loan - A home loan is a secured loan wherein a bank or a financial institution lends you money to help you purchase your dream home. It is generally given for a longer duration compared to other loan types because the amount borrowed is usually higher and requires a longer repayment plan.

Gold Loan - Thiswasone of the easiest and fastest way of loan when gold rate was at it peak. But currently lot of lenders may not feel it better collateral due to falling in gold price, especially gold loan companies. Recently RBI banned any gold loans against gold ETFs & gold mutual funds. Even though it forms easiest and fastest way of getting loan but better to look for risks involved in it, especially when you are dealing with NBFCs. Loan against Insurance Policies You can use your insurance investment as either collateral or take loan from insurer itself if that policy is eligible for loan. Usually loans will be available after 3 years of policy period. You will get loan easily on your policy from insurer. But other method to take loan is to pledge your policy document with banks and take loan on that. LIC will offer you loan on your policy with the interest rate of 10%, which I think competitive pricing compare to other type of loans. Loan against Bank FDs This is one form of loan where your collateral is your bank FD itself. Suppose you have bank FD of around Rs.10,00,000 then you are usually eligible to get loan upto Rs.8,00,000. But interest rate will 1-2% higher than your FD rate. But still this form of loan is also fastest and best way. Loan from PPF or EPF You can avail loan from PPF when one satisfies certain conditions. For detailed view on the same visit my old post PPF-Loan and Withdrawal. You can avail loan from EPF too. But you can avail loan from EPF only for special purposes like purchase of plot, medical treatment, education or marriage of children, construction or purchase of house, re-payment of home loan, renovation of home or pre-retirement. But all are not eligible to take loans. Their are certain conditions like minimum years of completion, age or proof you need to produce. So it seems bit lengthy procedure. Loan against Shares or Mutual Funds Few lenders offer loan against your investment value of shares or mutual funds. But you will not get more value from this. Reason is, both the investments (if mutual fund is of equity oriented) then fluctuation in values will be high. Hence to protect their loan amount usually lenders offer less loan. Loan from unrecognized sector This is one of the easiest but costliest way of fulfilling your financial dream. Usually interest rate will be in the range of 20%-30% but you can get it immediately. Such type of loans are useful who are running out of time and not have any source also to fund their financial requirements. But looking at this option is costly affair. Hence it is highly advisable to avoid such funding. Vehicle Loan This is usually used to meet your financial requirement when one is planning to have his dream car or bike. It is usually a secured loan where collateral is your vehicle and in case of default lender may recover it by taking back your vehicle. But some lenders offer unsecured loans where your credit score matters more.

Meaning of Vehicle loan :- Vehicle financing is the fastest and easiest way to buy a new car. This way allows you to buy your new car by paying only a small down payment up front and the rest in monthly installments. Therefore, instead of a one-time immense expense which is hard to attain, the vehicle payments becomes an integral part of your monthly expenses.Vehicle loanA carloanis a special type ofpersonal loan, which allows you to spread the cost of a car over an extended period of time, rather than paying the entire sum all at once. In return for thisloan, you must payinterestto the bank or building society from which you have borrowed the money, which means that the total amount you repay will be greater than the amount borrowed. Generally, you pay back a small percentage of theloaneach month, plus the interest charge: this is referred to as your monthly repayment.oan: secured and unsecured. Asecured car loanprovides the lender with a specified item ofsecurity; in the event that you are unable to repay the debt, the lender has the right to take possession of this item, which in the case of a secured car loan is usually your car itself. Anunsecured loandoes not require you to provide an item ofsecurity, but as a result, this type of loan usually costs youmore.

Before you take out a car loan, you should familiarise yourself with yourcredit report. A credit report is a document which records how you have gained and used credit, such asloans,mortgagesandcredit cards, in the past. This document can help you to consider whether or not yourapplication for a car loanis likely to be accepted, and will assist you inchoosing the loanthat best meets your needs.

Remember that a loan requires good financial management. If your personal circumstances change, you may find that you are no longer able to meet the monthly repayments, seeMissing Payments. Many lenders will offerPayment Protection Insurance(PPI) when you take out a car loan. PPIcovers the cost of your loan if you are unable to make repayments due to redundancy, or an accident or illness that affects your ability to work. Alternatively, you may wish to consolidate a range of debts,contacta debt management company or visit your local Citizens Advice Bureau. A carloanis an amount of money taken from a lending provider to purchase a new or used car. The individuals agree to repay the total amount of the loan along with the lending interest rate amount to the lender (often banks) as and when required.Individuals can choose a car from a list of models and manufacturers in India according to their annual income and budget. Presently, a common man can fulfill his dreams of purchasing a car by getting an auto loan. According to your requirements and financial situations, you can get auto loans from a variety of auto financing services such as Mahindra Finance, Tata Finance, Bajaj Finance and State Bank of India loans.For example, if you are thinking about financing options with Bajaj Finance, you must first give your information regarding the type of loan to the company. The Bajaj Finance associates will then get in touch with you to assist with the loan eligibility amount and the different offers and schmes available with their bank.These days, almost everyone has the desire to buy a car which best suits them according to their requirements. If you are one that has the desire to have a car, then simply fill out our form on BankandFinance.com to get free car loan quotes. You may also want to apply for car insurance through our site.

Types Of Auto LoansThere are several different types of auto loans so that every individual will find at least one auto loan that is able to meet their requirements.

Understand Your Options for Your Bad Credit Auto LoanAuto loans are helpful for people who need to purchase an automobile (or more), but cannot make the full payment right away. Many lending agencies offer such loans for the purchase of used cars, lease buyouts, or can help refinance a pre-existing car loan.Auto Loan Types: Simple Definitions to Help You Understand the Different Ways Your Car can be FinancedIf you enter "Auto loans types" into Google, you will be overwhelmed by the different kinds of auto loans out there. Let us examine some of the most common types of auto loans available. Note that there will be commonalities among some of them.A pre-computed loan is a basic principal and interest loan. In this, the interest and principal payments are pre-calculated before a borrower and lender agree and sign the financial paperwork. A big disadvantage of this loan type is that you cannot make car-payments in advance and expect to forego interest payments.A simple interest loan is similar to the pre-computed loan, but with one major difference. Here, interest is charged every day on the basis of the balance you currently owe. Therefore, the faster you pay you balance off, the less interest you'll pay overall. Thus, a simple interest loan with no prepayment penalties will be beneficial for those people who pay in advance.A secured loan is a loan in which you offer collateral against the loan. The collateral is usually another vehicle (and in many instances, the house of the borrower). Note that if you don't pay off the loan, the lender can take possession of the property you put up as collateral. Unsecured loans are usually the most preferred type of auto-loans. Here, the lender provides the loan on mere faith that you will keep your word. Given the risk involved, these loans are accompanied with high interest rates.A lease buyout loan is a viable option for those borrowers who are not going to be able to buy out the remaining amount on their car (lease). Here, a commercial lender will pay out the remainder of the balance on their lease. After that, the borrower will need to make regular payments to the lender.Car refinance loan, simply put, can be considered as a loan upon a loan. This type of auto loan will be helpful for borrowers who may end up unable to afford pay the high instalment amount. Note that while a car refinance loan may lower the instalment amount, the lender may slightly raise the borrower's interest rate