A lending institution is a part of a financial establishment that oversees and makes transitions such as investment, loans and deposits. If you are asking for a loan for a car or looking at currency rates for your holiday you are dealing with a financial institution.

The role of a financial institutions can vary, here are some of the more common types.

Commercial Banks

The most convenient way to look after your money commercial banks are the ones found on every high street, these give a great deal of security to customers as they offer users a safe place to deposit their money. Commercial banks also offer loans to business owners as well as current account owners. These loans can be for a variety of purposes but can include mortgages, car loans and they also offer overdrafts to those who need to access more money. The role of this institution is to  act as an agent that issue debit cards but also arrange money transfers at the convenience of the customer.

Insurance Company

The role of an insurance company is to collect payments or premiums from customers in a way that volume creates a pot of money in which they can pay for claims from should they occur. The idea is that the pot of money should be large enough to more than cover the less likely event that a claim is made thus insuring that anyone that pays for their services is covered for a pay out should an accident or occasion arise. Types of insurance can be home, life or car and many others.

Stock Brokerage Firm

These firms are responsible for helping a buyer and seller to negotiate and sell financial securities. This can be achieved through the trading of public stocks and various other types of transactions. The firm receives a commission for each transaction they facilitate and that is how they make their money. These offer a lending service where one party lends securities to another. This is in the form of the borrower using collateral that does not involve cash to exchange for loaned securities that amount to the same value plus a margin.

Credit Union Institution

These are member owned institutions are are famous for being non-profit. Profits are distributed across the members and their size can vary dramatically from small unions with one a few members to big almost commercial sized institutions. The basic service and point of a credit union is that the members pool together their money so that they can create loans. The role the institution plays in the community is significant since any profits are used to put into projects approved by the members and these can vary from savings accounts, credit cards, online banking and more.

These are just some of the main lending financial institutions. Like any form of loan is is still considered a debt until paid off, make sure you act responsibly and do not create more debt than you can afford if your circumstances were to change such as you lose you job or there is an impact to your health that could affect the way you work.

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