Types of Loans

A loan is a fixed value of money that an individual takes from a creditor intending to repay it fully over time, with some fees accrued throughout the loan period. The value that you may get from lenders varies typically contingent on some aspects, like your credit history, debt-to-income ratio, your monthly earnings, the lender you choose, among various other factors. There are many types of loans you may apply from lenders and understanding the features of these credits helps you to select the appropriate lend for your needs.

The lend you borrow can be used to meet various needs such as financing for a start-up, buying a new auto, funding a home, etc. But with so many different types of loans, which one is ideal for your needs?

We are going to discuss different types of loans, highlight some tenets for loan comparison, show you how to get a loan easily, and finally tell you what it takes to get safe loans.

Personal Loans

Traditional banks typically provide personal credits, and they can be utilized to meet almost any need – from settling hospital bills to purchasing a new sofa. These lends don’t need any collateral, but their value is not so big, typically reaching a few thousand dollars.

However, that doesn’t mean that lenders will approve the credit for you without doing any initial checks. They will need proof of your suitability of recompensing the money borrowed. As such, they may ask for your income proof or any other form of verification.

The best thing about these credits is that when you apply, you can know the outcome within a few days, and if approved, the financing doesn’t take a long time.

However, there is a dark side to this credit. The rates are ridiculously high compared to the conservative loan types.

Another limitation is that the credits offer a short term that renders them useless for folks looking for larger sums. Practically, personal credits are ideal for folks looking for smaller amounts to repay within a couple of years.

Small Business Loans

These types of loans are commonly intended for small business owners or start-ups. However, you can only receive them if you have a viable business plan. They are typically provided by the Small Business Administration (SBA) or traditional banks, though nowadays you can apply online from online financiers.

Some financial institutions need a guarantee, usually collateral to secure their lend in case your venture fails. The amount given might be up to millions of dollars, contingent on the size and the type of the venture.

The rates charged are determined by the lending institution. Also, the term of credit repayment varies, but it is generally between five and twenty-five years.