When we talk about loans the very first thing which comes to our mind is confusing questions. Which one will be the best? How to proceed for it? What all papers you will need? What interest you will be paying and many more. There are many different types of loans which are there. Each and every financial institute that is private or government they offer loans on different rate of interest and try to make their offer most beneficial and lucrative for clients. Let’s see what all loans are popular these days.
Personal loans are the ones which are demanded by an individual for their personal use. Examples of personal loans are home loans, education loans, car loans, credit cards. To get these loans whenever you need in future one needs to maintain their credit scores. if one’s credit score is not up to the mark you won’t get the loans.
Just opposites personal loans commercial loans are demanded by some companies or group of people running some business. Such as commercial mortgage, corporate bonds. To get this business loans credit scores of that particular company matters. If the credit scores of commercial organizations are not compatible one is not eligible for loans.
These are one of the most popular loans amongst all. In secured loans one gets money against some of their personal properties, that’s why they are also called mortgage loans. In these types of loans not only your credit score matters but the value of your property also matters. Such as housing loans, gold loans, car loans etc.
In these types of loans ones property is not kept against the loans. Nothing needs to be kept as mortgage for these loans. They are purely based on credit scores. Examples of such loans are personal loans, educational loans, credit cards etc. One more very important difference between secured loans is that they charge higher interest than the secured loans.
Non-fund based lending
In this type of loans are just like its name. In this bank does not give any cash outlay but instead of that they only give assurance. These are basically called Letter of Credits that is why they are called non funded loans. They actually come in role when clients fail to fulfill the contract with the third party involved. When they are not able to pay their debts then bank comes in their role and do the needful.in banking language or the paper language it’s also called as Contingent liability.
Fund based lending
These loans are simple loans in which cash is given to any individual or group of individuals. Bank lend out the asked money to the clients on some terms and conditions.
Term loans are the loans in which bank gives money on terms basis. Means the bank will give u options when you want to pay off your loans. These loans are term bounds like as short term loans which last in less than one year, client needs to pay off his loans in less than a year’s time frame. Then comes medium term loans whose tenure is of one to three years. And the last one is long term loan is more than three years. The client needs to pay the loans in the selected tenure. Although the term periods for agriculture loans are different.