In simple terms a loan is an agreement of understanding in which a person, an institution or an entity lends something of monetary value (money, property etc) to the borrower with an undertaking that the monetary object will be returned within a stipulated duration of time.
Types of Loans There are various types of loans available to suit specific requisites. These loans are provided by banks, financial institutions, private money lenders, friends & family. Some common requirements could be for setting up of a business unit, purchasing property or a house, loans for buying automobiles, student loans and etc.
The different types of loan are available mainly in the focus of the purpose of the loan. The most popular types of loan include home loan, personal loan, car loan, student loan, payday loan, debt consolidation loan and so on. The lenders have also introduced many subtypes of these loans, to meet the necessity of the specific group of people.
The point essentially has to be noted is that these loans have different rates and repayment track. Each type of loan will be structured according to the needs of the particular loan. In case of a particular loan type such as home loan, the repayment track will be longer and the interest rates will be comparatively cheaper.
Take for example a PLUS loan. These loans are available to parents with good credit to allow them to borrow up to the cost of tertiary institution attendance for their undergraduate children. This type of loan is usually used for tuition, supplies, housing, as well as books for the undergraduate and the interest rate for this type of loan is generally fixed.
Many people choose to have variable APR since this type of loans have come under much scrutiny recently due to the recent boom of foreclosures and many people were unable to pay their houses payments. One other thing to consider on bank loan rates is how a person's credit affects the terms of loan. Of course, having a good clean credit history is accommodated compare to having a bad credit history.
Auto loans are tenable in nature. It implies that very similar vehicle provide as collateral for the loan amount. To concern you an auto loan, financial companies will take into concern factors such as the amount you wish to borrow, the loan term, the repayment installments, insurance, your credit details, income, the taxes and much more.
If you have a bad credit, a cosigner is required to get your loan approved. Unlike other standard loans for students, this is an instant process to obtain funds. Terms and conditions vary from one lender to another, so ensure to find the best option for your financial needs.
Home Equity Loans: Since, one pledges the equity value of one's home as security against the loan amount as a result this loan is secured in nature. This type of loan is a kind of second mortgage from which individual can derive a fixed amount of money and that has to be paid within a specified amount of time. It has another advantage, as per the income tax law the interest paid is tax deductible.
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