Overview of Loans
Company loans are loans received by the employee from the company. The conditions of such loans are usually more favorable for the employee than those of loans issued by the banks. They are often issued for a particular purpose such as to build a house or to purchase an automobile.
The employee has the advantage of receiving the loan when it is required and then paying it back in regular installments at either a lower rate of interest than offered by the banks or without having to pay any interest whatsoever.
The company can make the employee's entitlement to a loan dependent on specific criteria, such as his or her length of company service. Granting such loans creates an additional bond between the employee and the company.
The loan is created and then released for payment. Repayment is effected within payroll accounting by withholding the appropriate installments.
Repayments continue until the loan has been paid back in full.
Characteristics of company loans Japan are: