Introduction of Loan types:
We can call it types of loans or the loans, but actually these are the different types of loans offered by the banks and financial institutions. When you go to apply for a loan, there will be a number of terms. There are conditions and rules that you have to fulfill in order to get that money from the lender.
A lot of my readers are wondering how to qualify for a loan. While there are lots of questions about financing, there is no question that you need to know about loan types. This is because each type of loan has its own set of criteria and details.
Being a first time homeowner, you probably have a lot of questions about home loans. There are many types of loans, and you have to choose the right one for your circumstances. This article will help you understand different loan types and make an educated decision when applying for a mortgage loan.
Loan Categorization:
A loan type represents the way in which a loan is funded. Loans can be categorized as secured or unsecured and by definition, secured loans are backed by collateral such as an asset.
Loans made up of several components which are categorized into different types of loans. These types of loans include:
Credit Card
A credit card is a form of unsecured personal loan. It enables you to make purchases using your own name, address and identity information. This type of loan is ideal for those who want to make regular payments without having to worry about interest and late fees.
Personal Loan
A personal loan is an unsecured form of credit. Money is borrowed from a financial institution at an agreed interest rate over a specific period of time. (usually 12 months). Personal loans can be used for any purpose including paying off debts, starting a business, buying a car or home renovation project etc., You simply pay back the money according to the agreed terms and conditions when due.
There are many different types of loans that you can apply for, depending on what your situation is. The main differences between them are whether they’re secured or unsecured. And whether they need to be paid back in full or over time.
Secured loans
have a lien on the property you’re borrowing against. It means that if you don’t pay back the loan in full, the lender can take over ownership of your property. Unsecured loans do not have any liens attached to them.
There are two types of loans available for small business owners:
- SBA 7(a) loans guarantee a portion of the loan amount and also offer a fixed interest rate for the life of the loan. The government pays borrowers an interest subsidy on these loans, which is paid back to lenders over time through higher payments of interest.
- Small-business investment loans (SBICs) are private lenders who provide financing to small businesses owned by minorities, women or veteran entrepreneurs. These loans can be used to purchase equipment or make improvements to a business, but they must be repaid within five years.
