Pawnshops, Lending Investors

and Pension Funds

Pawnshops

 Shop or business who loans money to people who bring in

valuable items which they leave with pawnbrokers.
 Importance:
 Rely on their own funds to support their operations.
 No information regarding the use of loans provided.
 Lend to people who fail to qualify for bank loans.
Lending Investors

 Lending investor is any person or entity engaged in the business of effecting

securities transactions, giving loans and earns interest from them.
 A lending investor locates people who have money and matches them with
people who need money and are willing to pay a certain interest rate for it.
Some people are unable to borrow money from banks or credit unions and
must pay a high interest rate to obtain a loan. Other people have money and
want to make a profit from it. Unlike banks or credit unions, these investors
only do one thing: they lend money for profit. These investors also operate
on a smaller scale, with a smaller capital base and operating in a specific
geographical area. Lending investors typically have more lenient credit
score requirements, allowing these individuals to obtain loans, albeit at
higher interest rates.
 Because of their small territory, they often know their clients personally,
allowing them to assess the risk of the loan based on details such as the
client's personality and circumstances. They also frequently provide faster
processing so that clients can get their money faster.
Pension Funds

 are retirement plans funded by corporations or

government agencies for their workers and administered
primarily by the trust departments of commercial banks
or by life insurance companies. Pension funds invest
primarily in bonds. stocks, mortgages, and real estate.
 acumulates capital to be paid out as a pension for
employees when they retire at the end of their careers.
 ensure there will be enough money to cover the pensions
employeesatter teeir retirement in the future.
Defined Benefit Plan

 based on formula that takes into account

factors such as employees salary, years of
service and age at retirement. Employer is
typically responsible for funding the plan and
managing the assets.
Defined Contribution Plan

 Made by the employer and employee as the investment

returns earned on those contributions. Employee is
typically responsible for managing the investments and
bearing the investment risk.