Comment on the following: "To the borrowers, securitization does not matter for what they get is loan and to them it makes no difference as to hold the claim." Comment with suitable example.

Securitization is a technique by which identified receivables and other financial assets can be packaged into transferable securities and sold to investors. The instruments issued under securitization deal derive their value from cash flows (current or future) or collateral value of a specified financial asset or pool of financial assets, general debt obligations or other financial receivables. Normally, these instruments do not have any recourse to the originator other than aforementioned assets and specified third party support mechanisms that are clearly defined and are not unlimited (i.e., credit enhancements). The simplest way to understand the concept of securitisation is to take an example. Let us say, I want to own a car to run it for hire. I could take a loan with which I could buy the car. The loan is my obligation and the car my asset, and both are affected by my other assets and other obligations. This is the case of simple financing. On the other hand, if I were to analytically envisage the car, my asset in the instant case, as claim to value over a period of time, that is, ability to generate a series of hire rentals over a period of time, I might sell a part of the cash flow by way of hire rentals for a stipulated time and thereby raise enough money to buy the car. The investor is happier now because he has a claim for a cash flow which is not affected by my other obligation; I am happier because I have the cake and eat it also and also because the obligation to repay the financier is taken care of by the cash flows from the car itself. In this way, in securitization the loan itself is not sold to another lender but rather a security instrument is created backed by the principal and interest payments on the loan. Through this means the beneficial ownership of the loan is effectively transferred. The purchaser of the loan assumes the risk in the event of loan default, and the lender removes the risk from the balance sheet. Once securitisation has taken place, then the securities themselves can be treated in a secondary market. To the borrowers, securitisation does not matter for what they get is loan and to them it makes no difference as to who holds the claim.