Loans surround our everyday lives; we take different kinds of loans for various occasions in our lives; sometimes, we take a bank loan to pay for a new business initiative; sometimes, we take a loan to pay off our bills, and sometimes we take loans to buy a car.
Every loan type has a specific use, and all loans have a different payback time, which is calculated depending on the amount of the loan. The interest on loans is also calculated according to the payback time and the amount of the loan.
People in every country take a loan to meet their needs however few loans are popular in a few countries. However, these 5 types of loans are most common in every country. According to statistics, these are the most revenue-generating banking products.
Consolidation Debt Loans
This loan type means to help you in simplifying your finances and expenses. In simpler words, a consolidation loan can pay off many or a few (specific few) of your outstanding debts. The consolidation loan is especially useful to people who want to pay off their credit card bills.
By paying credit card bills, we mean that you will have to pay fewer amounts every month and lower interest rates. This type of loan is considered as the second type of personal or mortgage loan.
As the name suggests, student loans means the loan which is provided to a college student and to his family to cover and pay for higher education. There are two types of student loans, namely; private student loans and federal student loans.
Private Banks provide private loans, and they have tighter deadlines and stricter rules. The government funds federal loans, and they are why they have a lower interest rate and are friendlier towards the students and have lenient repayment laws for those who take the loan.
The auto loans are for your vehicles and are tied to your property (you can apply for this loan if you don’t have property). These loans are provided to you people so that they can afford to buy a car or any other vehicle they want.
However, that vehicle can be taken back if you don’t pay the interest on time. Banks or car dealers offer these loans, but one thing that everyone should know is that even though the car dealers’ loans are better; but, they are stricter when it comes to returning those loans, and they also have high-interest rates.
These loans are related to property and are distributed by the banks (exclusively). Mortgage loans help the consumers in affording a home that you can’t pay for in upfront.
A mortgage is tied to your home, and you can suffer from foreclosure if you don’t pay on time and can lose your house. Mortgage loans also have the lowest interest rates when it comes to repayments.
Any persona can use these loans for his interests. They don’t have any specific purposes, and they are also not bound to be used for a particular purpose.
That is why these loans are the biggest assets of those who have outstanding loans and want to pay off their interest rates and reduce them. These loans depend on credit card histories of loan receivers.