There are various types of loans provided by the financial institutes, it is important that everyone has a basic idea about the purposes and types of common loans provided by banks and other financial institutions. Today we’ll be looking into the 4 most common types of loans. Read along, to grab some useful information.
Personal loans basically are for personal purposes, there is no specific purpose of this loan. This is prominent for individuals with outstanding debts. These loans are offered on the basis of either collateral, or based on your credit score and income.
Student loans are the loans provided for college going students to aid them pay the cost of higher education, which is quite expensive. Further, this loan divides into two types: Federal and Private student loans. Federal student loans usually have a lower interest rate and come with convenient repayment terms.
Mortgages are loans provided to help individuals to buy a house, who can’t pay upfront to buy the house. However, the mortgage loan comes with terms that the portion of land or house that is being bought stays under the bank’s name until the full payment is recovered by the bank. In case of default payments, the house can be seized by the bank in order to recover the easy loan cash Singapore.
Bank overdraft is a short term loan, which allows individuals to withdraw more cash than they have in their account. This comes with a higher interest rate compared to personal loans however it is lower than payday loans, which makes the government encourage individuals to get a bank overdraft instead of a payday loan (payday loans are for individuals who find it hard to manage the gap between the pay checks) because payday loans come with higher interest rates and have a pretty short repayment period in comparison to all other types of loans.
These are just the 4 most common loan types, there are many more for different purposes with different terms and conditions. Hopefully, you all grasped something useful.