Types Of Loans And What Kind Of Loan Customer Can Ask To Bank
Money is the basic need of the people. Though you might have enough savings but there are times when you are out of funds and need them urgently. No matter, it is a medical emergency or you need funds for a new business project or you need funds to get enrolled in a university in abroad, there are several loan options that you can take into consideration.
One of the most commonly taken loans is the short term loan or the payday loan. These loans are considered as the best to meet the emergency needs as they get approved quickly and you can get the funds in your account in as quick as twenty four hours. The only thing which might bother you is the high interest rates.
How many kinds of loan you can take from bank?
There are seven types of loans available in the market.
- Closed-end loans: Closed-end loans are those in which you have to pay the full amount to the bank on a fixed date. In this kind of loan, interest rate is fixed, so the customer does not suffer. Closed-end loans help also in increasing credit score of the customer. If customer pays the loan on given date then he becomes more credible. So, in that way if he can get the loan easily by the bank only if he has good credit score. He can take Closed-end loan only once.
- Open–end loans: Only those customers who have good credit score or they have already paid a closed-end loan to the bank on time can take Open-end loans. Open-end loans are like taking mortgage on home, lend your home to bank and get money in favor.
- Unsecured loans: Unsecured loans are like personal loans. They depend on the credit history of a customer. If he is getting a good salary and have strong financial backups like property so he can be considered for unsecured loans. These kinds of loans are unsecured loans because interest can increase anytime.
- Conforming loans: These loans have special kind of guidelines. If customer fits in these guidelines then he gets the loan. Conforming loans are given against mortgaging homes or any property. If that property is located in rich and lavish colony, he gets the loan easily.
- Non-conforming loans: customer gets non-confirming loans if bank finds that the customer is highly qualified and has good credit score. If the customer expects more amount then that amount can be obtained by non-confirming loan.
- Secured loans: – When the customer asks for a loan on their house, pre saving funds and vehicle, these kinds of loans come in secured loan in which interest is fixed after inspecting the property of the customer who wants to mortgage it and the credit score of the customer.
- Conventional loan: conventional loans are the loans taken by any department authorized by the government. Amount of convention loan is similar to conforming loans and non-conforming loans. This kind of loan is not available for common people.