Should you take a bank loan, and what are the risks in taking these loans? The lender takes a risk in giving these loans because there is always the chance that it will not get paid back. That is why banks do extensive credit checks before they sign on the dotted loan, and approve the application. It is also because of this risk that they tend to charge high-interest rates on the loans that they offer. 

These high-interest rates are a burden on the borrower. The borrower has to pay a large instalment to clear his loan every month. In the initial days of the payback period much of the amount in the instalments goes towards payment of the interest. It is only in the later days that the instalments go towards payment of the principal. Many borrowers pay the instalment out of their salaries. Many of them even opt for direct payment to the bank from their salaries itself. When the salary comes into their account every month, some of it automatically gets deducted and sent to the lender towards payment of the loan. This becomes quite disconcerting for many borrowers. 

There are times when borrowers take a loan from the bank when they are in a good job or their business is going well. Then one day they lose their jobs or their businesses start to fail. Then it becomes a burden for them to make their monthly payments. The banks wait for a couple of months, and then they start sending the collection agents to their door steps. This becomes quite embarrassing for the borrower, and they suffer a loss of status in their social standings. 

Many borrowers put up their house or their car or some other object of value as collateral for their loan. When they fail to pay back their loan, they lose this object of value and they then have to undergo great hardships in life. They also get entangled in a messy legal process that could take years to resolve. 

But not all the parts of taking a loan are bad news. Loans help borrowers achieve their dreams. They are able to buy the house that they always dreamt of. Without the loan, buying the house would have been out of their reach because it was too expensive, and they could not afford to finance it on their own. Loans help parents finance their children’s education, and allow young people to buy the car that gives them high social status. 

Loans are a valuable source of income for the banks. The interest that they charge from the loans allows them to make a good profit every year, and it also allows them to pay their depositors healthy returns on their investments. Loans allow banks to circulate money in the economy, which is what the primary aim of banks is. Ultimately, the risk in taking loans can only be mitigated by the ability of the borrowers to pay it back. Once the instalments are paid back at regular intervals, there is no risk in taking the loans.

You would have noticed that most banks these days prefer that their customers use ATM machines for their transactions and not walk into the branches for their day-to-day transactions. They do not want their branches crowded with customers hassling their tellers, and branch managers. Some banks go so far as to charge customers for the transactions they make when they come into their branches. Having incurred the cost of setting up ATM machines in every nook and every corner of big and small cities, clearly the banks wish that their customers use these facilities. The ATM machines offer many benefits to both the banks and their customers.

Having ATM machines in different parts of the city saves banks the trouble of having to put up branches everywhere. They can only have branches in select parts of the city where large wholesale and corporate transactions are made, and serve their retail customers using the ATM machines. This saves them the trouble of having to recruit a large number of employees, and having them in branches that might not necessarily get that many customers.

For the customers also having ATM machines close to their homes or their offices work to their benefit. They can simply walk up to a machine whenever they want to make a transaction and complete the process as quickly as possible. Since many of these machines are conveniently located they can be accessed easily, and the customer is saved a lot of travelling time.

It takes a lot less space to install an ATM machine rather than a full-fledged branch. In large cities where real estate prices are exorbitant, this works out as a huge cost saving measure for the banking firms. There is also no staffing required for an ATM machine other than the cost of hiring a security guard, and the machines can be installed even in the vicinity of residential complexes allowing the banks to directly reach the customer.

It is also possible to use the ATM machines of other banks, which means that even if the customers are not able to find an ATM machine of their own banks, they can always use the machines of other banks. They can make monetary transactions from just about anywhere. This is not possible if banks only gave branch facilities to their customers.

Most ATM machines are open, round-the-clock. This means that customers can use them in the early hours of the morning or in the late hours of the night. They can withdraw cash in urgency before that long road trip or get some quick cash just after they have returned from a long holiday.

ATM machines offer numerous other benefits as well. For instance, they can be used for checking bank balances. They can also be used for making payments. With so many advantages, it is little wonder then that ATM machines have become the standard portal which the banks use to interact with their customers. Customers no longer stand in long queues at the teller’s counter in a bank’s branch. They simply walk into the ATM machine next door.