Loans
Author：dengqi Posted on：6-4 3:05 Saturday Classification：student loans
A loan refers to a debt that is given to a borrower by the lender. There is always a cost of borrowing involved when taking up a loan. This cost is called the loan rate or the interest rate. Loans usually have loan rates based on various factors such as the credit history of the borrower and the amount being lent etc. Loan interest is usually a percentage of the amount being lent to the borrower by the lender.
Debt Loans
Debt loans are not typically secured by a lien or by collateral. A typical debt loan is credit card loan. These loans are like a promise or a contract between the lender and the borrower governed by certain loan covenants. The cost in this case is the interest that is charged on the money being borrowed and no other security is held. Banks and other financial institutions make use of debt loans to speed up the circulation of money and they assess a person’s credibility by looking at his previous credit history and other such factors. Corporate bonds are also a form of a debt loan. Loan interest maybe higher than other secure loans as no property is being held as a security that the loan will be paid back.
Equity Loans
Equity loans are issued on real estate. For Example, a person can put
a lien on his property such as land or a house and take a percentage
of the total value of the house as loan. The property of house that has
been kept as lien will be a security or a guarantee to the lender that
the money will be paid back and if the borrower fails to pay back the
borrowed amount the house can be sold off to recover the money. As the
lender has a security of the entire amount that he is lending the
interest rate charged on the loan is lower than the interest charged to
un-secured loans like credit card. At times the borrower may take up a
loan to buy a house or a car from a financial institution and in this
case the house that is being bought or the car that is being purchased
is the security of is kept as a lien against the loan being given.
Consolidation Loans
Consolidations loans refer to loans that avoid monthly loan payments
and instead of making several debt payments you make just one. Loans
can be converted into a consolidation loan by combining several loan
payments into a single payment.
Debt consolidation loan can enable a person to repair his credit
rating. By making your loan payment promptly and in one go you give the
impression that you are financially stable and committed to paying back
the loan you take up and are not a defaulter. Also, you can avoid
defaulting on payments through debt consolidation loan if you are unable
to keep track of all your payment periods.
For people who have different interest rates applying to different
loans that they have taken up and each loan has a different payment date
then consolidation of all these loans into one loan can facilitate you
by applying one interest rate to all the loans and making the payment
on one day. If you do not want to spoil your credit rating even by
chance if you miss a payment debt consolidation is the solution for
you.
A debt consolidation loan can be secured or unsecured. Most secured
loans are secured by the borrower’s house. It does not have to be a
house necessarily any item of significant value can be used as security
for secured loans. The item that you will provide as a security to your
lender will give them confidence that you will pay back the amount
being loaned to you and in case you fail to do that they can always
sell off the item to recover their money. Secured consolidation loans
offer higher amounts to be borrowed and lower interest rates along with
flexible spending options.
Unsecured consolidation loans are very risky for the lender and that
is why they secure their lent money by higher interest rates and
restrictions on how the money can be used.
People with bad credit rating can also get both type of consolidation
loans and can repair their credit rating through making regular and
prompt payments on the consolidated loan. Carefully negotiate the terms
and conditions of your loan with the loan officers to avoid any hasty
decisions that may result in a loss to you. It is always better to
research and check the market for various offers and then go with the
best option that suits your needs. Many loan officers have become
incredibly flexible and accommodating towards people with bad credit
rating.
Small loan
A small loan is also known as a fast loan and it comes in handy at
the time of emergencies. The paper work and formalities of a small loan
are minimized to facilitate the borrower and speed up the process. Some
companies offering fast loan or small loan ask the borrower to fax
some important documents however; others even exempt them from these
steps.
Small loans are of small amounts as suggested by the name and a
person can apply for them in case someone in the family falls sick and
they are still waiting for their pay which is due in a week or two.
Other similar emergencies can also be handled by the virtue of a small
loan.
Online Loan
Several loan companies and banks have started offering online loans.
This has further facilitated the borrowers and instead of going from
loan officer to loan officer they can surf for the appropriate offer on
the web and get the best offer of loan rates with the conditions that
suit them best. There are several companies that offer loans but have no
physical presence and only exist on the web and offer online loans for
borrowers. The payback periods and amortization etc of a loan can be
calculated on the particular website by using a loan calculator that
asks for simple details and you get to see the entire details of the
loan you are assessing.