Different Types Of Loans

A loan is when you receive or borrow money from friend or any financial establishments such as a bank in exchange for future repayment of the money with interest. Loans are of two types; Secured and Unsecured Loans. A secured loan involves the holding of an asset, such as a house, car or boat. An unsecured loan is not common because if the borrower is not able to pay the loan, then the lender does not have the right to take anything in return. For more visit banklån. Loans are provided by considering conditions such as where it will be spent and how the loan is useful to the person?

Types Of Loans

Personal Loans

Personal Loans are mostly offered and provided by most of the banks and fina
ncial establishment. These loans can be used for any purpose, such as paying your personal bill or buying a new asset. Personal loans are unsecured, and one can borrow up to thousand of cash. As the loan is unsecured, some income verification is needed that should be in proper handshake proportion with the money being borrowed.

The application form for the personal loans are of two to three pages long and response for the loans is guaranteed within a few days. The disadvantage or downside of personal loans is that the interest rates are high with respect to other loans. This interest rate ranges from 11-13%.

Home-equity Loans

Using the home equity loans homeowners can borrow the money in turn of the equity they have built up in their home. In other words, homeowners are taking the loan against their house’s value. This loan can also be used for different purpose, but most commonly it is used to build or reconstruct the home or for debt consolidation. The interest for the loans is tax deductible and reasonable with the term usually ranging from 1 to 20 years.

Small Business Loans

Business loans can also be provided by local banks, which can help one to extend their business. Local banks approve loans that have been submitted with the formal plan. This loan requires a personal guarantee and thus one has to give a particular asset if the business plan fails. The loan amount ranges from a thousand to a few million in cash and can have the term period of up to 25 years to repay the loans.

Students Loans

students in libraryThese type of loan is provided by the bank to the students and their families to cover the cost of the students higher education. There are two types of loans such that Public Student Loan and Private Student Loan. A public Student loan is the best option as it comes with the lower interest rates.