Asset Types Common to Securitisation
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The document discusses various asset types common to securitization, including auto loans, student loans, and credit card receivables. It explains how these assets are bundled and sold as securities to investors, who receive payments from the underlying assets. Each asset category has unique characteristics and risk profiles, affecting potential returns on investment.
Asset Types Common to Securitisation
- 1. ASSET TYPES COMMON TO SECURITISATION D o m e n Z a v r l
- 2. DOMEN ZAVRL 2 As well as mortgages, some of the asset types most common to securitisation include auto loans, student loans and credit card receivables.
- 3. DOME N ZAVRL 3 AUTO LOANS Car financing is a common category of asset- backed securities. Like mortgages, auto loans are bundled together and split into different groups with varying risk profiles before being sold to investors as securities. These securities owners inherit payments connected to these assets, including principal payments and monthly interest payments. STUDENT LOANS Funds that students borrow to attend college are regularly packaged into asset-backed securities. Investments can be made in either student loans handed out by the government or loans from private sources, like banks. The latter tend to offer a potentially larger return but come with a slightly higher risk. CREDIT CARD RECEIVABLES Stakes can also be bought in money owed on credit card balances. These kinds of asset- backed securities do not incorporate fixed payment amounts, and when balances are paid off new loans (and other changes) can be added to the pool. Returns are in the form of annual fees, interest and principal payments. Funds that students borrow to attend college are regularly packaged into asset-backed securities. Investments can be made in either student loans handed out by the government or loans from private sources, like banks.
- 4. DOMEN ZAVRL To learn more about this topic, visit the blog of Domen Zavrl.