Types of loans and loans today — All you need to know
Types of loans and loans today, there are many. Loan in essence is one of the private types of loan, the difference between these concepts is that loans are granted only by banking organizations.
Types of loans and their classification
In a broad sense, a loan is the transfer for temporary use of a resource, most often financial resources. The main condition of the loan is that it is issued for a certain period and a percentage is taken for its use.
Between the recipient of the loan and the lender signed an agreement (contract), which describes all the conditions on which the loan was issued. Failure by the debtor of the loan agreement entails liability, which is expressed in fines, penalties, prosecution.
Types of loans:
· the usury is one of the oldest types of credit, it has always been issued at “predatory” interest;
· Lombard — loan secured, which is taken in case of non-payment of debt;
· consumer loan — a loan designed for individuals, most often taken to make small purchases. Læs mereom forbrugslån.
· commercial — this loan consists in the issuance of goods with a deferred payment;
· international — a loan in which the lender and the borrower are representatives of different countries, the participants in an international loan may be states, banks, commercial companies;
· state — as the debtor in this type of lending is the state, as the lender — legal entities and the population, he is taken to cover the budget deficit;
Types of bank loans
There is no generally accepted classification of bank loans in the world; they are divided into types according to terms, purpose, size, security, and some other parameters. By appointment, they are consumer, mortgage, agricultural, industrial, etc. Bank loans can be on demand or urgent. In terms of loans are divided into short-term (less than a year), long-term (more than 3 years) and medium-term (1–3 years).
The loan size can be small, medium and large, the latter is considered as such if it exceeds 5 percent of the capital of the creditor bank. In addition, loans can be secured and not secured, real estate is most often used as collateral, in addition, it can be industrial equipment, land, cars.
Another important parameter, according to which loans are divided, is the method of calculating interest rates. The rate itself can be both fixed and variable. It can be charged on the balance of the debt or on the entire loan immediately, dividing the amount received into equal payments. All the above parameters must be indicated in the loan agreement.
Types of mortgage loan
A mortgage loan is a type of bank loan that is usually taken to buy or build a property. Most often these are long-term loans with a fixed interest rate. Payments for such a loan are paid monthly in equal amounts.
One type of mortgage is a loan with a “ball” payment. The essence of this loan is that at the end of the loan period a main, “ball” payment is made, which may include the entire loan amount and interest or a part thereof.
“Spring” mortgage loan is paid in equal shares over several years, after which there is a recalculation of interest on the remaining part of the debt and the payment becomes lower.
Participatory mortgage is a complex financing scheme in which the debt is partially or fully repaid by income from the acquired property. This type of mortgage lending is considered to be profitable for banks, therefore the interest rate on it is set lower.
Types of short-term loans
Short-term loans are loans for a period from 10 days to 2 months. Most often these are very small loans, designed to fill an urgent cash shortage. Since very short-term loans to banks are not profitable, they charge a very high interest rate for them.
One type of short-term loan is overdraft. The bank charges the client with a salary card an amount equal to the salary that has not yet been received. If the client spends this money, the bank will, after a certain time, withdraw both the debt and the interest.