A loan that a person with an adequate credit history and ability to repay
It can be obtained from a bank or private creditors. Most people take credit when making larger purchases, such as a car or apartment, and they also take a loan if they only have a couple of days to pay but all the funds have already been spent. The credit is granted for a specific period of time, depending on the type of credit and the terms on which the credit is drawn. Some types of loans also require a guarantor or pledge. The bank or private creditors are also paid interest at the time of repayment. There are several types of credit available that give people a great deal of access to what they want, but can’t afford it right away because of their personal finances.
Depending on the length of the repayment period, loans are divided into two large groups – short-term loans ( repayment term up to 1 year ) and long-term loans ( repayment period more than 1 year ). Short-term loans include quick loans, overdraft, credit line, consumer credit. Long term loans are mortgage loan, student loan, student loan, investment loan. Business credit or factoring for working capital.
Quick credits can be obtained via the Internet or via text message.
No collateral or guarantor is required. The lender can grant the borrower the requested amount in just a few minutes. However, when choosing this type of credit, keep in mind that it has a very high interest rate and that the repayment time is very short (usually up to 1 month). If the loan principal cannot be repaid within the specified time limit, it will be expected that the service will be a paid service. However, in order to attract new customers, fast credit lenders offer the first interest-free loan, meaning that they must repay only the loan amount, not the interest, within the deadline. A quick credit offer is usually used when your finances are up, but you will only be paid in a few days. And, primarily, this credit is for emergency situations where additional resources are urgently needed, such as an accident or an accident.
Overdraft, a credit line is a type of short term loan to individuals. This type of credit is linked to the payroll account of the individual, which also serves as a guarantee to the bank that the loan will be repaid. Overdraft is an additional tool that can be used when your personal tools are exhausted and you need to buy something. The amount of credit can also exceed one monthly salary, depending on the bank’s offer. However, since this is a short-term loan, the interest rate is high – 17-25% per annum.
Consumer credit is another type of short-term credit that is designed for extra spending, such as leisure trips, home appliances, medical services. Consumer credit also tends to be used for credit consolidation – when several small loans are combined into one larger, for example, consumer credit. Consumer credit is divided into short-term loans, although the loan repayment term can be longer than 1 year. This type of loan also has a relatively high interest rate, which depends on the conditions of the credit institution. You do not need a guarantor or pledge to obtain a consumer loan. The amount of a consumer loan can reach several thousand euros.
One type of long-term loan is mortgage. It is usually used when you need to make large purchases, such as buying or paying a down payment on a home or apartment, home improvement or repairs. This type of credit requires a pledge. Usually it is real estate. Depending on the conditions of the bank or private creditor, the loan is for up to 40 years and the amount of money you can get is from a few thousand euros. However, the lender will not issue a credit that will cover 100% of the total amount of money needed to purchase the item. Depending on the creditor, up to 90% of the total amount can be served. Mortgage loans are also sometimes used for loan consolidation when the amount of other loans is large or if the loan cannot be repaid over a period of approximately 1 year. As the mortgage is long-term, the interest rate is low – 4-6% per annum.
A student loan is a long-term loan for both full-time and part-time students who cannot afford a higher education free of charge (budget) or who cannot afford to pay the full tuition fee themselves. The lender can cover up to 100% of the total amount of money needed, but without a government guarantee. The amount of the student loan is automatically transferred from the bank to the bank account of the educational institution. As a result, this type of credit ensures that the borrower cannot use the amount granted for other purposes. You only have to start repaying your credit after you finish your studies. If you leave your school before you get your diploma, you also have to start repaying your credit sooner. During the studies and for 11 months after graduation, the individual has to pay only the interest, but after that the principal of the loan has to be repaid together with the interest.
Student credit is money that is given to a student. They are meant for social needs, everyday expenses like transportation, eating, buying books. The loan is payable for 10 months (not paid in July and August). Because student loans are long-term loans, they have a low interest rate – depending on the bank or private lenders, it fluctuates around 5%.
Investment credit is one of the types of credit for businesses.
It is used when finances are needed to start new business projects, purchase necessary equipment, transport, premises, as well as repair or construction work. In order to get an investment loan, you also need a pledge. This can be real estate, company shares or fixed assets, assets. Sometimes it is also possible to use the business owner’s guarantee as collateral.
Companies have loans for working capital financing. It is a short-term loan that cannot be obtained by an individual but only by companies. Such a credit facility is used when you need to purchase additional items during the seasonal sale, such as Christmas or summer sale, and is also used to launch new items to complement the product range.
Factoring is a type of commercial transaction in which the bank’s customer receivables are purchased. This is a service designed to improve cash flow. The debt is transferred to the factoring company and the money is immediately received. In this way it is possible to obtain financing in which the receivables, which are subsequently collected from the buyers, are secured or pledged. This service includes financing, reduced administration services, subrogation. The risk of non-payment of debts is also reduced.
When choosing one of the types of credit, it is imperative to first look at the offers of banking and private creditors, the interest rate and the terms offered by the particular lenders. It is imperative that you choose the type of credit that is specifically needed for the individual. Advice on the most appropriate type of credit will be provided by the credit institution of your choice. It is also important to consider whether it will be possible to repay the loan in a timely manner, since entering into debt can result in bankruptcy of the individual.