Types Of Loans

June 07, 2016  //  Posted by: Crowe  //  Category: Uncategorized

LoanThere are several types of loans, some you might be aware of and some which you are not aware of. Loan is taken when a person is need of money and he does not have but do have a capacity to pay if given time. Thus there can be varied reasons for taking a loan. But when you are taking a loan, you must decide which type of loan you want and which will be the best suited to you. Here are several types of loans with characteristics and their features also know pros and cons of each one of them and then decide which one to opt for.

  • Personal loans

Personal loans are such loans which are very common and it is offered by most of the banks. Such loan can be used for any of the goals. You can use proceeds of this loan for almost any kind of purpose. Personal loans are considered as the unsecured loans and it can range and it can range from few hundred dollars to few thousand dollars. Lender will be checking out for verification or any proof or any asset for the amount which would be equal to your borrowing. Application for such types of loans is generally two pages long and if it is approved then its approval is granted within few days. Interest rate on such types of loans can be pretty much higher. It can be about 10 to 12 %. One of its drawbacks is also that it has to be repaid within a period of two years. Thus you can borrow this loan only when you have a capacity to pay it within this definite period of time. Thus if you are seeking this loan for investing into a large project, you cannot take this loan as large projects take long time to generate money.

  • Credit cards

When any person uses credit card, he just takes a loan which he is promising to pay at some later date. Credit cards are considered to be the most attractive source for getting finance for any individual as credit card is very prevalent in many markets and it is accepted worldwide. If you want to obtain a card, you just need a one page application. The process of credit review is also very much fast. If you have a made a written application it is generally approved within a month or maximum two months. If you see from usage point of view, credit cards are very much flexible.

  • Cash advances

Cash advances are also considered as a type of loan only. It is type of short term loan and it is offered by credit card companies. Cash advances can be quite easy to obtain but of course like other types of loans, there are some or the other drawback to these types of loan. These types of loans are not tax deductible and also the interest rate charges and other related fees can also be quite high. Amount of loans can be hundreds of dollars and hence it can not be used for long term needs of finance.