Loans have a single purpose, to provide individual money that is used for different purposes. It could be to pay another debt, to buy a car or a house, to invest in a business, or for emergency purposes.
People apply for a loan for different reasons. If you are planning to apply for a loan anytime soon, you should educate yourself first that not all loans out there are the same. There are different kinds of loans that banks and financial institutions, as well as lenders, offer which come with different terms and conditions, amount of money and different ways to apply.
In order for you to learn the different types of loans, you should check out the rest of this post now from coe loan singapore.
- Conventional loans– This can be availed from mortgage lending institutions that are not backed by a governmental agency. Conventional loans come in two forms; conforming and non-conforming loans. Conforming loans varies the amount on your current financial status or the location of your house. The better financial status, the bigger the loan you can avail. Non-conforming loans, on the other hand, do not conform to the current qualifications as well as the guidelines set by financial institutions that provide the loan for you.
- Unsecured loans– This type of loan is not backed by any collateral, but instead, the interest rate and the amount of the loan is determined with your credit history and your regular income. This means, that unsecured loans are easy to apply. In general, unsecured loans are usually known by many as personal loans, payday loans, or signature loans. You can avail of this loan if you have a stable and good income, a good credit standing, and a stable and well managed financial status.
- Open-ended loans– This type of loan is a fixed-limit line of credit which can be borrowed anew after you were able to repay it accordingly. The best example of this would be credit cards. The lender or the financial institution that offers this kind of loan approves your application for a certain credit or the amount which is usually based on the percentage of your entire financial status.
- Secured loans– This is usually involving more than a hundred thousand dollars or even a million dollars that you can get either from a bank or from a financial institution, however, before you get too excited, it has the strictest qualification and requirements because of the amount of money, and you cannot avail of this loan when you do not have a leverage or an asset that you can provide as a collateral for the bank or the financial institution. Its interest rate and the amount of your loan depend on the value of the collateral that you presented to the lender as your leverage. The most common secured loans’ collaterals are both houses, vehicles, savings accounts, and other things that can be considered good collateral.