There are moments in life when, due to lack of liquidity, to be able to buy an expensive asset, such as a house or a car, or to face an unforeseen expense, you need to ask for a loan. The best known are the staff and the mortgage, since who else or less has asked for any of these at some time. However, they are not the only ones that exist and there are different types of loans depending on what we want the money for and that may have different interests and conditions. Therefore, before applying for one, you should continue reading and knowing the main types of loans there are and which one best suits your circumstances.
The most popular types of loans
As we said it is one of the best known. It is not in vain that it is present in the lives of most families for decades. They are granted to buy a house or to build it and the house in question is the guarantee, although it is not ruled out that the financial entity also asks to have a payroll or guarantor. They are medium-long term loans that are paid over several decades through a monthly installment. The interest rate can be fixed, variable or mixed and the main benchmark is the Euribor.
They are the ones who ask to meet a specific need at a given time such as an unforeseen expense, a trip, a wedding, a small home repair, etc. Sometimes guarantees are not requested, therefore, as the risk assumed by the financial institution is greater, interest rates are higher than in mortgages, in which housing is the guarantee. They are usually returned in a few months or years. There are financial institutions that offer pre-granted loans to clients with a good credit history. (We recommend here that you read the articles What are pre-granted credits? And What is credit history).
Among the types of loans, these are specifically requested to buy durable goods such as a car, appliances or furniture. They are characterized by a relatively short expiration period that usually does not generally exceed five years. The lent amounts are usually not very high. They can be granted even by certain establishments when acquiring products in them, in a practice that is usually known as installment payment with interest.
They are best known in Anglo-Saxon countries with an expensive university education, especially in the United States. In recent years, in which scholarships have been cut by the economic crisis, they are becoming more popular in Spain. They are intended to pay for university tuition, postgraduate studies or a master’s degree and interest rates are usually lower than those of a personal credit. There are some that even allow not to pay interest during the first years in which it is still being studied. Read more here about student loans.
It is one of the ways that companies have to obtain financing either to start the project, deal with a lack of timely liquidity or buy goods necessary for their activity. They can be short or medium-long term, depending on the amount needed and how much money will be used.
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