Clean loan意思
"Clean loan" is a term used in finance and banking that refers to a loan that does not have any special features or conditions attached to it. A clean loan is a straightforward loan where the borrower receives the funds and agrees to repay the principal and interest over a set period of time, typically with regular installment payments.
Clean loans are in contrast to "dirty loans," which are loans that have additional features or conditions, such as:
- Collateral: Where the borrower pledges an asset as security for the loan.
- Guarantors: Where a third party agrees to be responsible for the loan if the borrower defaults.
- Subordinated debt: Where the lender agrees to be paid after other creditors in the event of bankruptcy.
- Interest rate swaps: Where the borrower and lender agree to exchange interest payments to hedge against interest rate risk.
- Deferred interest: Where the borrower does not have to pay interest for an initial period.
Clean loans are often associated with personal loans, student loans, and some types of business loans, where the lender assesses the creditworthiness of the borrower and approves the loan based on that assessment alone, without the need for additional security or conditions.
Clean loans can be attractive to borrowers because they are typically less complex and have fewer strings attached, making them easier to understand and manage. However, because they do not have additional protective features for the lender, clean loans may have higher interest rates to compensate for the increased risk.