Loan practice can be traced back from ancient writings and scriptures. While its exact origin is unknown, it has been around over the centuries. It started with barter where merchants exchange goods such as grains and precious stones. Then individuals lend money with interest. This system greatly influenced the current structures of lending money in banks.
The word bank came from banca, Italian word which means bench. In early times, people giving loans do their business transactions over benches which they have put up in market places. When their business is not doing well, they break these benches as a gesture to close.
Indentured loans in Europe were one of the earliest forms of loans. Rich farmers and landlords give money to those in need and the borrower will pay by working in the farms of the lender. This system is still practice in some countries all over the world. Some modified it by charging high interest instead of service.
Today lending through banks is popular. People keep their surplus money in a bank and the bank lends it to other individuals with a corresponding interest. Banks offer different kinds of loans – personal loans, car loans, home loans among others.
Credit card is the modern type of loan. It makes financial life easier for those who know how to use it wisely.
Trivia Info Resource: zepfinance.com.au