A loan is defined as a thing that is borrowed, mostly a sum of money that is expected to be paid back with interest. Loans come in all kinds of forms ranging from simple amounts from small amounts between friends and family members to complex loans. There are many types of loans and credits.
Two types of credits are:
Open-end credit and closed-end credit
Open-end credit, also known as resolved credit can be used for purchases and will be paid back on a monthly basis. However, it is not necessary to pay it every month. Examples include credit cards, home equity loans, home equity lines of credit.
Closed-end credit is different from open-end credit as the consumer needs to follow a regular payment schedule. It includes interest charges, until the principal is paid off. It is used to finance a specific payment for a specific period of time. They are also called Installment loans. Examples include Car Loans, Mortgages, Payday Loans.
There are many types of loans and they vary depending on their intended use. There are valued by a number of variables like, length of time, interest rates, payments, etc.
Some of them are
What makes them attractive is th at they can be used fo any expensew and don’t have a designated purpose. They entirely depend on your credit history. It is a good option as they help in paying up outstanding debts, such as credit card debt.
These kind of loans are provided to college students to help cover their expenses for higher education. For example, if a guy wants to go abroad for higher studies, he will probably go for a student loan. There are two main types: Federal funded Loans and Private Student loans.
The first type of loans come with lower interest rates and more consumer-friendly repayment issues as compared to Private Student Loans. And hence, it is a better option.
Auto loans are tied to your property. What people miss out on these kinds of loans are that eventhough these loans that you get from banks or dealerships might be convenient, they will often carry higher interest rates. They can help you afford a vehicle, but you might lose it if you miss out on payments.
These are some of the loans and credit options available to the people. Take care when you borrow money from banks or people and only do so if you are sure that you can pay it back.