Difference Between Similar Terms and Objects

Difference Between Subsidized And Unsubsidized Loans

loan Subsidized vs Unsubsidized Loans

Subsidized Loans are the ones in which the cost or partial cost of the loan is paid by someone other than the user. Some examples of subsidized loans are education loans, agricultural loans, housing loans, business loans, etc. Unsubsidized loans are where the user is himself bearing the cost of the loan.

Subsidized loans are generally floated to achieve a specific goal and generally come with a lot of strings attached. Although these may sound to be a good deal, one must thoroughly evaluate all the aspects and clauses very carefully before accepting. For example the student loans are generally subsidized by the government or trusts, foundations, non government organizations, etc. The loans first of all would be given to very deserving individuals and not be available to all. These would generally also require the student to maintain a minimum grade average throughout the course period. They would also specify the family status and maximum income for those who can avail this. Housing loans are generally subsidized to promote settlements in a particular area or in areas hit by natural disasters or war. Subsidized housing loans would normally specify the residential area, maximum property size, maximum construction cost and the time period. Business Loans are generally available for industries that the government would want to develop. Most governments are promoting industries producing equipment related to alternative energy sources like solar energy, windmills, etc. Unsubsidized loans would normally be available to anyone able to show his financial ability to pay back the loan and came with very few strings attached. Students for example do not need to maintain a consistent high average of grades and hence can also take up work along with studies. Unsubsidized property and business loans would virtually be available to anyone with payback capacity.

The other problem that may happen with subsidized loans is the fact that these may not be very flexible. The unsubsidized loans on the other hand are very flexible. They may offer you the option of negotiating interest rates, change the time period, use deferred payment plan and even allow you to prepay the loan if an when the money is available.

Summary
1.In Subsidized Loans the cost of the loans is partially or fully covered by someone else whereas in unsubsidized loans the cost is borne by the user.
2.Subsidized loans are offered to achieve a specific goal whereas unsubsidized loans are available for just about anything.
3.Subsidized loans generally come with a lot of string attached and are not very flexible whereas the unsubsidized loans can be tailored to one’s needs.


Search DifferenceBetween.net :

Custom Search


Help us improve. Rate this post! 1 Star2 Stars3 Stars4 Stars5 Stars
Loading...

Email This Post Email This Post : If you like this article or our site. Please spread the word. Share it with your friends/family.



Leave a Response

Please note: comment moderation is enabled and may delay your comment. There is no need to resubmit your comment.

Articles on DifferenceBetween.net are general information, and are not intended to substitute for professional advice. The information is "AS IS", "WITH ALL FAULTS". User assumes all risk of use, damage, or injury. You agree that we have no liability for any damages.


See more about : , ,
Protected by Copyscape Plagiarism Finder