A loan is money borrowed from a lender or any financial companies with an additional percentage of interest rate when repaid. This is commonly considered as a solution for people who are experiencing financial problems because they got to have money immediately when needed. Right now, hundreds of financial institutions were recorded to have been established all across the globe throughout the years with each offering various services that depend on the amount of money borrowed. As an example, some of the Licensed Money Lender Singapore is known to be reliable in providing convenient financial services; Visit Easy Credit to know more.
Moreover, loans come in various types depending on what purpose the money was borrowed for. Some people might use it for their businesses, while some use it for their expenses. And to have more ideas regarding these types, here are the common loans offered in lending companies.
Secured loans
A secured loan is a type of loan where a borrower is obliged to present collateral to the lender company. This said collateral serves as a security for the institution for cases where the client wasn’t able to follow the regulations or default the contract. Usual examples for collateral could be anything considered as the client’s personal property which could be his or her savings accounts, vehicles, and houses.
For the loan amount and interest rate, these could vary depending on the total value of the property the borrower has presented as leverage. In general, a property with high value can help a borrower apply for a larger loan and better rate of interest after taking into consideration the borrower’s credit history and loan length.
Unsecured loans
The very opposite of the previous loan, an unsecured loan is a borrowed money where clients are not requested to present a back-up like collateral. Unfortunately, as the only security, the lender or the financial institution have these results in having higher interest rates. Also, similarly to other loans, credit history is being taken into consideration and the client’s income must be in a stable situation to apply for this type.
Term loans
A term loan is another type of loan that solely depends on the total period the client has agreed to fully repay the borrowed amount. As an example, if the borrower is eligible enough to receive a higher interest rate, then he or she would be more likely to have a shorter loan term. Unfortunately, as being said, this borrower is obliged to pay a more-than-average interest rate thus he or she must have a constant monthly or annual allowance and is considered to be in a stable financial situation.
Housing loans and car loans
Commonly transacted by people who wanted to buy new vehicles and houses, housing and car loans are types of loans categorized by the primal purpose the money was being used. Unlike the previously mentioned loans, these two specifically covers expenses with regards to the housing and vehicles of the borrower.
For the interest rates, these vary depending on the agreed transaction between the borrower and the lending company. As an example, if a person happens to be in a good situation and is capable of paying monthly or annual amortization, then he or she could agree to have a higher percentage of interest rate to repay the borrowed amount in a shorter period.
Equipment loans
An equipment loan is a type of loan where the money is used for buying or repairing equipment. This is commonly applied by people who own manufacturing or any related businesses. Similarly to other loans, the transaction of equipment loans depends on the amount borrowed and the eligibility of the borrower. For example, if the borrower happens to be a well-known company, then they could apply for a larger amount of money. The transparency of the financial records could also be a great help for business owners in applying for this loan.
Conclusion
Money has become a necessity for people. Despite its size, this can help create new things and buy almost anything. Because of its value, this has become a material for categorizing a person’s social status and power; the more money they have, the powerful and respected they become. Unfortunately, this hierarchy created discrimination within the people. As an example, only those who can afford to pay the bills can be provided with good quality of medical care. Thankfully, with the help of financial institutions like those who belong to the Licensed Money Lender Singapore, these lower and middle classes people can cover their tuition fees, emergency expenses, and even build their businesses. With hundreds of these establishments, individuals can find appropriate policies that best fit their financial problems; Visit Easy Find to know more about the transactions regarding these loans.
