Types of Loans
In today's world, loans are a valuable option to solve your financial issues. But the availability of different types of loans may make it difficult for you to decide that which loan is perfectly suitable for your current situation.
That's why we've collected some information about the most common types of loans that can solve your financial issues at different stages. So, without wasting any time, let's look at the types of loans offered by licensed moneylenders for various financial issues.
The personal loan is the most common type of loan that an individual can use for several purposes such as medical emergency, home renovation, and holiday trip. The best part is that you can easily avail this loan without providing security or collateral. There are several elements (including income level, repayment capacity, and credit and employment history) that a lender uses to approve the loan.
The most exciting thing about the personal loan is that you can use it for any purpose without having to be worried about the limitations. Unlike credit cards, the personal loans come with the lower interest rates (approximately 6%). And you can easily qualify for a personal loan if you have a good credit score.
You can even use the personal loan to consolidate high-interest debt. Thus, you can quickly pay off your debt by saving money on interest. Moreover, the personal loans provide you with the flexibility to choose the tenure based on your needs. However, you must calculate the EMI before you decide the tenure.
The personal loans are the best for urgent needs of cash as you can easily get a personal loan within 72 hours. You can get your loan approved within a day if you're an existing customer of the bank. The interesting thing about a personal loan is that it usually comes with a fixed interest rate. Thus, you won't have to be worried about the increasing interest rates at all.
So, if you need urgent cash to solve your financial issues, personal loans can be the best option for you. But you must try to explore other options before you apply for a loan because you're supposed to pay additional charges in the form of interest when you use a loan.
The name itself relates that it's a short-term loan that is supposed to be paid off within a few weeks. This loan appears to be a quick solution for financial emergencies. The best thing about the payday loan is that it can save you from several penalties that can affect your credit rating. The advantage of applying for a payday loan is that you can easily get it approved within an hour or so.
The borrower can easily apply for the loan without filling those lengthy and complicated forms. You don't need to be worried about booking an appointment as you can easily apply online. The reason why a payday loan is a better option than credit cards is that it comes with the facility to receive your credit in cash. It means you can independently use the payday loan on anything you want.
The interesting thing about a payday loan is that you can quickly come out of the circle of debt in a short period. Thus, you won't have to worry about making installments months after months. Initially, the lender will approve a limited amount of money based on your salary range. However, if you build a better relationship with them, they'll offer you a higher amount based on your reputation.
Bridging loan is another common type of short-term loan that is supposed to cover an interval between two transactions. You can use this loan to purchase a new property before your existing property is sold. The payback period is associated with the contractual timetable of the sale of the existing property. However, based on your situation, you can ask for an extended payback period but not more than one year.
And the lender will ask you to show the evidence of your existing property and the property you're going to purchase. So, make sure that you keep everything prepared before you apply for the loan. The investors are now taking advantage of the bridge loans to grow their business in underperforming multifamily properties. The investors can use the bridge loan to stabilize a property so that they may meet the requirements of traditional lenders.
Another interesting thing about bridge loans is that you can choose repayment options yourself instead of relying on the patterns created by the banks. You can even use this loan to make payments on time so that your credit rating doesn't get affected. As a result, you'd also be able to qualify for the long-term loans in future.
Moreover, the bridge loans are a bit better than the conventional loans as you're not supposed to provide any detailed income documentation for the bridge loan. So, if you want to beat your competitors in the industry, the bridge loan can be an excellent option for you.
The only problem you can face with the bridge loans is that they come with higher penalties, fees, and interest rates. And at the end of the term, you'd have to submit a large balloon payment. Here are some common types of fees you're supposed to pay when taking a bridge loan:
- Notary Fees
- Appraisal Fees
- Loan Origination Fees
- Administration Fees
- Wiring Fees
- Escrow Fees
So, make sure that you carefully compared the advantages and disadvantages of the bridging loan before you apply for it.
No matter whether you're willing to start a new business or trying to expand your services, the business loan can make things a lot easier for you. The business loans provide you with comprehensive financial assistance to keep your business up and running. Before applying for a business loan, you must conduct proper research to find information about whether you can qualify for the loan or not.
And try to understand the terms and conditions of the loan so that you do not get trapped. The business loans make you feel free from all types of restrictions while allowing you to spend the loan amount independently. The banks won't ask you anything about how you're spending the money if you're making all the payments on time.
Similarly, the business loans are easily accessible, and you won't have to spend a lot of time finding the loan as you can easily discuss the details with the bank's administration. Moreover, the reason why a business loan is a suitable option for business owners is that it comes with reasonable interest rates. Thus, you won't have to worry about additional expenses at all.
These are the most common types of loans you can use to manage your expenses. So, if you're facing a financial issue, you must consider choosing a loan that can solve your problems in the best possible way.