Mike Solomich 1/14/08 Chapter 13 1-10 1. Bank loans are classified in five different categories: single-payment loans, business installment loans, bank line of credit, secured loans, and unsecured loans. Single payment loans are a short term promissory note with repayment required after a short time period. Business installment loans are used primarily for durable goods that last several years. Bank line of credit is the maximum amount the bank is willing to lend by honoring checks written for accounts exceeding the current account balance. A secured loan relies not only on the borrower’s promise to pay, but also on the pledge of some specified property. An unsecured loan is based solely on the creditworthiness of the borrower. 2. The difference between bank interests rates and bank discount rates is that the discount rate a customer pays is not the same as the rate of interest paid on other loans. 3.
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