How Do I Say These Loan Terms In Banker Lingo

What does "selling debt" mean (in layman’s terms)?

Julie lent John $100. John promised to return $110 at the end of the year (10% interest).Six months later, Julie needed some money. She couldn’t wait long enough for John to return her money with interest. So, she decides to sell the debt to David in exchange for $50.David is happy to oblige. If he buys Julie’s debt of $100 dollars for $50, he makes a $60 dollar profit when John returns the principal with interest. Julie is also happy, since she gets $50 dollars now instead of having to wait for six more months.There’s also another possibility that John might not return the $110 dollars he owes Julie.This is the risk David took on himself, by buying Julie’s debt for $50.

What is the range of interest rates that "loan sharks" typically charge?

“Loan shark” is a derogatory term for a person who makes small, short-term, risky loans. It doesn’t make sense to speak of an “interest rate,” because the lender is not charging the borrower for the use of the funds, but rather to cover expected losses from defaulting borrowers and the expense of handling small transactions.If you take out a 30-year, fixed-rate mortgage for 80% of the purchase price of a single-family, detached home in a good neighborhood, the interest rate you are paying is for use of the bank’s money. There is very little risk to the bank in such a loan, and the costs are small relative to the principal amount.If you need $200 to pay a parking ticket—without which your driver’s license will be suspended and you will either risk a much bigger fine for driving without it or lose your job—and you won’t be able to repay the loan until payday next week, the economics are entirely different.There’s no security for the loan, and you obviously don’t have spare income if other unexpected expenses come up. Lenders know some loans will not be repaid. Also, the cost of arranging the transaction and collecting are significant fractions of the amount borrowed.If the lender asked for $220 back the following week, this annualizes to over a 14,000 percent interest rate. But clearly that’s not what’s going on here. The lender might be charging $5 for costs, $10 for expected credit losses and getting $5 for interest and profit. The lender isn’t getting rich on this deal, and it can be a great deal for the borrower.Although popular mythology holds that loan sharks use violence to collect, this is not accurate historically. You can’t run a profitable business hurting your customers, and it’s not worth beating someone up for the amounts of money involved. Traditional illegal lenders only lend to people embedded in social networks that make it unlikely that they will disappear or permanently refuse to pay.

Do the terms “credit” and “debit” mean different things in accounting and banking?

In fact debit and credit do mean nothing in their literal sense,these are just two terms and when the three golden rules of accounting are applied,these two terms now show different consequences depending upon which rule is applicable.So the terms “debit” and “credit” do not mean anything but their use does.I will not write the three golden rules as everyone has already provided it in their answers.So, coming to the question you meant to ask,according to the golden rule for personal account we debit the reciever and credit the giver.We in our books apply rule of Personal Account whenever we transact with the bank,so when we deposit money in to the bank we debit the bank Account(debit the reciever)and credit cash Account(credit what goes out).This entry simply means that we treat bank as a artificial representative person to whom we have given money for time being and we are entitled to withdraw the same at anytime in future.Similarly in the books of bank the same transaction would be recorded asCash Deposits account will be debited(debit what comes in) and party account Who is depositing cash is credited.(credit the giver)Passbook is a your Account in the books of bank ,therefore whenever bank debits your account it means your balance with the bank is reduced and when bank credits your account it means the balance with bank is increased (as initially at the time of deposit,your account was credited).So,therefore if your passbook reflects a debit balance then your the bank account in your books should reflect a credit balance(ofcourse amount will be same).

What is a ledger balance?

When the postings are over, each ledger account is totaled and balanced. The Ledger balancing of an account means ascertaining the difference in the total of both sides of the account and putting it on the shorter side. After ascertaining the difference we will get two type of balance show as below:Debit Balance:Credit Balance:1. Debit Balance:If the debit side of an account exceeds the credit side, the account is said to have a "debit balance" to the extent of such difference which is put on the credit side of the account in order to make the totals of the two sides equal and against this amount the words "By balance C/d" (C/d means carried down) is written in the particulars column.this balance is brought down on the debit side while opening the account for the next period and the words "To balance B/d" (B/d Means Brought down) is written in the particulars column.Show Example2. Credit Balance:If the Credit side of an account exceeds the Debit side, the account is said to have a "Credit balance" to the extent of such difference which is put on the Debit side of the account in order to make the totals of the two sides equal and against this amount the words "To balance C/d" (C/d means carried down) is written in the particulars column.this balance is brought down on the Credit side while opening the account for the next period and the words "By balance B/d" (B/d Means Brought down) is written in the particulars column.Show Example