Loan lending generates a lot of revenue for the banks & other financial institutions. There are different types of schemes which the money lenders follow, but here we will discuss about Mortgage Loan & a simple car / auto loan.
How are Mortgage and Auto Loan Similar
Mortgage Loan & Auto Loan use the item purchased as Collateral. Both the type of loans give the full right to the money lender to seize the item purchased in case the applicant fails to pay it back.
You must have come across a popular question as an MCQ which has the following options :
How are mortgage and auto loans similar?
Here are the options which are available
- Option A – The loan is issued by the seller.
- Option B – Money is given to the borrower monthly.
- Option C – Interest rates are rarely charged.
- Option D – The item purchased is used as collateral.