What you need to know about each type of credit

When it comes to urgent financial needs and looking for the best consumer loan or credit option, you can get lost in different types of loans. Different purpose loans or credits tell us about different services. Therefore, in today’s Buendía family blog post, we talk about the main types of loans, what they are different and when it is best to choose.

Housing loan

home loan

If you are planning to buy your own home – you probably won’t have all the money right away, so with your down payment, the next step is to look for the best home loan prices. Mortgages differ from others in that they are usually of the longest maturity and can last up to several decades. You also need your own down payment to get a home loan.

Often people who rent a home for quite a long time come to the conclusion that paying a mortgage is almost like paying monthly rent, with the only benefit of eventually becoming a home. However, when choosing a home loan, it is extremely important to evaluate your payment options, as this commitment is extremely long-term, and keep in mind that this loan will take years to pay, so it is essential to take the time to find the best deal.

Consumer credit

Consumer credit

Consumer credit is usually used when a larger amount of money is needed for unexpected expenses. Consumer credit can be short-term, with borrowings of just a few weeks or months, and long-term, with borrowing times up to several years.

The advantage of consumer credit is that you do not have to spend a lot of time, go to the bank several times and manage many different documents to get it. Make it all the power at home, even without getting off the couch Credit can be ordered online and the money will be in your account the same day.

Collateralized loan

Collateralized loan

This is a type of loan where a certain amount of money is only given through a mortgage. The pledge can be, for example, a house, a homestead, a car, etc. The pledged property provided all payments are timely, can be used without any restrictions.

However, when choosing this type of loan, it is crucial to have a good look at your solvency and ability to meet your financial obligations, as you run the risk of losing your mortgaged property in the event of serious financial difficulties.

Business loan

Business loan

This type of loan may be granted to legal persons who wish to develop their existing business or to natural persons who are just interested in starting their own business.

Business loans can be made to purchase a variety of equipment or facilities, when needed for raw materials or to invest in new business.

Refinancing

Refinancing

Refinancing is the process of transferring an existing financial obligation to another institution in an effort to reduce the interest payable, extend the maturity or otherwise improve the terms of payment. However, it is worth considering whether refinancing is really the best option that will save you money. Calculate what premiums you would receive when you transferred liability to another company, how interest would change, and how much you would pay in total. Of course, there are certain situations where refinancing reduces the burden of liabilities, but sometimes it happens that even with the refinancing of a loan, the interest rate reduction is extremely minimal.

Before choosing a loan type, think carefully about the amount you need and borrow only what you really need to avoid potential financial difficulties. Also, consider the purposes for which you need a loan and this will make it easier for you to choose the best lender.

Leave a Reply

Your email address will not be published. Required fields are marked *