4 Different Types of Most Common Loans People Apply for

| November 26, 2014 | 0 Comments

There is a major problem of unequal distribution of wealth across the world. The richer is becoming richer and the poorer is becoming poorer. It, thus, has led to various economical issues at a global level. To bridge this financial gap and to meet the requirements of the underprivileged class of people, banks have come up with a product termed as Loan. It is normally given to the people seeking financial help for their various needs.

loan-people

The different types of common loans that people apply for are:

Personal Loans: These are the instant loans. They are generally taken by people to meet their urgent requirements such as buying a personal laptop, financing home renovations, going for a small vacation with the family, buying a new car, paying tuition fees of the children, etc. At the economical level also personal loans are a great help. They even out the cash flow and thus strengthen the state.

The drawbacks of this type of loan are that the interest rate could be really high, generally ranging between 10% and 12%. Personal loan amount needs to be repaid within a period of 2 years, thus making it unsuitable for financing larger projects.

Home Loans: To have a home of your own is like an ultimate dream. For a common man this is considered as the biggest achievement. Home loans have helped to change this dream to reality for many people till now. Home loans also give certain tax benefits on the principal amount and the interest amount in the form of deductions from taxable income. The home loans are offered for a long period of time ranging from 5 to 20 years, depending upon your credit score.

The high rising property rates and ever rising interest rates can act as a major issue. Thus, it is always advisable to check all the aspects of the home loan before making a rush for it.

Credit Cards: Opting for the credit card is like taking a small sum of money with a promise to return it at some later date. They are the most commonly used source of money around the world. Their usage is rampant because of the fact that they provide cash readily. No other form of loan can beat a credit card in terms of time taken to provide funds to the seeker.

There are pitfalls and that too big ones. The interest rates on the credit cards is maximum, almost 20% per year. Also people are more likely to run into debt due to its easy use. It is popularly called as plastic money. It is easier to pay by a credit card rather than by cash these days.

Online loans: You can now also apply for loans online at a low interest rate. They are generally considered as a type of personal loans which are applied online. The rising use of internet has led to increased connectivity, hence making this possible. It is a convenience loan.  It is the only competition to the credit card with loan approval time being as low as 48 hours. Also one can get the approval for online loans for bad credit easily which is generally not possible when opting for other types of loans.

The above given does not cover all type of loans. There are various other products available for the financial seeker. It is just an introduction to the most popularly available products in this area.

Author Box:

Thomas Brown discusses on the most common types of loans that draw people towards them. He also talks of online loans for bad credit that not only address your financial needs but also make the money available to you in shortest time possible.

Category: Loans

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