What type of loan to choose?


Modern borrowing possibilities are diverse, so much so that it is easy to be confused by the wide range of offers. In addition, complex loan conditions exacerbated the embarrassment, sometimes even explaining the type of loan and its limitless possibilities.

At the same time, get a cash loan is a responsible and serious stage in your life, so it is essential to understand and understand the nature of the loan. Equally important is realizing your abilities so that your choice does not cause harm and unnecessary anxiety. On the contrary, it will become a successful financial transaction.

The article discusses the types of loans: consumption, or cash, credit; auto loans; car rental; re-credit; maintenance loans; Mortgages; quick loans.

Before you start to study all types of loans, we recommend that you familiarize yourself with some basic principles, which will help you understand the nature of loans. If you are already familiar with the basics of loans and the important criteria that should be taken into account when choosing a loan, please click on the “Personal loan” link to go to the section which considers the first type in more detail. loan.

Loan: Concept, Signs, Issue order

A loan is a process of lending money or property to a party within a specified time frame. The participants in the legal relationship determine the procedures as well as the terms of debt transfer in the form of an agreement, including the useful life of the asset and accrued interest. In addition, loans can be given free of charge.

The main types of loans are:

  • ownership – provide for the free transfer of the object;
  • consumption (consumer credit);
  • banking.

Interest-free loans are usually granted by company management to employees, and the state grants certain categories of citizens. Given the primary goal of financial institutions to make profits, bank loans always earn accrued interest.

As an advantage of a loan, it should be noted that there is no overpayment, nor related to the credit history of the borrower.

The essential characteristics of loans that distinguish this type of small loan standard loans include:

  • Transfer the temporarily used property to another person within a specified period, after which the debt will be returned to the owner, in addition it can not be replaced with similar items or compensation;
  • There is no obligation to pay interest for the use of the property or the rent.

Credit: definition and types

Credit – Transfer of funds from the lender to the borrower according to the conditions of urgency, payment and repayment. In most cases, the lender is a banking organization.

According to the loan agreement, any natural person or company can become a borrower. The financing conditions stipulate that the amount of the debt, as well as the accrued interest, must be returned as soon as possible.

If the borrower refuses to perform his obligations, the lender has the right to initiate compulsory collection proceedings.

According to different loan methods, the loans are divided into the following types:

  • Consumers-used to purchase goods and services;
  • The banking sector provides targeted capital spending, including leasing and factoring;
  • Mortgages, funds used to purchase residential real estate;
  • Commercial – a form of interaction between counterparties involving the provision of installments or deferred payments;
  • Pawn shops provide funds backed by liquid securities;
  • State-Use low interest rates to finance natural and legal persons from the state budget.

Credit History – What Is It And How Does It Affect Getting A Loan?

Credit history is a snapshot of your financial obligations, including long-term fulfilled and unfulfilled commitments. In addition, it is essential to know that a credit history also takes into account the accuracy of the payment, including the timely payment of utility bills or other services.

Credit history is essential as it determines the formation of your other financial obligations; in other words, it directly affects your chances of getting the required loan.

After receiving the loan application, the lender will check the borrower’s credit history against the credit register and contact the borrower as necessary to request other information that can help the lender to assess, such as the source of the loan. income. It should be added that in the absence of work or official income, loans can be refused.

Suppose the credit history is negative or the borrower has unpaid debts. In this case, frequent late payments, a disproportionate number of unpaid loan obligations, etc., will reduce the likelihood of getting a loan.

Depending on the internal situation of the credit institution, the loan requested by the borrower may have a higher interest rate in the event of a monthly repayment or down payment. However, lending institutions can also refuse to grant loans due to damaged credit records.

How to apply for a loan?

If you could only apply for a loan by going to a non-bank lending institution or a bank branch, now there are more opportunities to do so, and it’s much more convenient.

Of course, you can apply for a loan in a known way – going to the lender’s office to complete the application form in person, but it can also be done remotely, for example by phone or by calling the service center at the lender’s customers.

The customer service specialist will ask the borrower’s questions during the dialogue instead of filling out the application form. Nevertheless, it should be noted that the borrower should have the right to access data, such as a passport or electronic identity document.


Depending on the maturity, the loans are divided into short term (up to 1 year), medium term (1 to 3 years) and long term (more than three years). Interest rates can be fixed or floating. In the first option, the interest on the loan remains unchanged for the duration of the loan contract. Finding information and quotes is very important, so you should read all of its terms carefully before signing a contract. If you have any questions, we recommend that you contact an expert, as they will be happy to tell you everything in a language the borrower can understand.


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