Loan sale
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A loan sale is a sale, often by a bank, under contract of all or part of the cash stream from a specific loan, thereby removing the loan from the bank's balance sheet.
Often subprime loans from failed banks in the United States are sold by the Federal Deposit Insurance Corporation (FDIC) in an online auction format through companies. Performing loans are also sold between financial institutions.
A loan can be sold either by the lender itself (a bank or other financial institution) or by a third party that purchases the loan for further sale.[1][2][3][4] Companies specializing in the purchase and sale of loan portfolios are called credit agents or factoring organizations.[5][6]
Generally, loan portfolios are sold to banks, financial institutions or investors.[7][8][9] Banks may sell loans to realize liquidity surges or to get rid of troubled assets. Financial institutions usually buy loans in order to diversify their investment portfolios and earn additional profits from interest on loans. Investors may also be interested in acquiring loan portfolios to generate a steady stream of interest income.[10]
See also[edit]
External links[edit]
References[edit]
- ^ "Indirect Loan: What it is, How it Works, Examples". www.investopedia.com. Retrieved 2024-02-10.
- ^ "The Creditor-Debtor Relationship". www.business-case-analysis.com. Retrieved 2024-02-10.
- ^ "Loan". www.wallstreetmojo.com. Retrieved 2024-02-10.
- ^ "Business Loan Agreements: Everything You Need To Know Before Signing". www.forbes.com. Retrieved 2024-02-10.
- ^ "Credit Agency: What It Is and How It Works". www.investopedia.com. Retrieved 2024-02-10.
- ^ "What Companies Are In the Finance Field?". review42.com. Retrieved 2024-02-10.
- ^ "What Is a Loan Portfolio?". pocketsense.com. Retrieved 2024-02-10.
- ^ "What is a loan sale and how does it work?". creditnews.com. Retrieved 2024-02-10.
- ^ "Portfolio Loan: What It Is, How It Works, and Who Qualifies". businessyield.com. Retrieved 2024-02-10.
- ^ "What is a bond? How to earn a steady stream of income by loaning money to a business or government". www.businessinsider.in. Retrieved 2024-02-10.
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