There are different types of loan contracts that are available which differ in varied terms. There are loans that range from promissory notes to complex loans which include mortgages, student loans, etc. Banks, credit unions and other financial institutions lend money to invest on necessary assets like cars, home, land, etc. Some loans like the small enterprise loans and Veteran Affairs loans are assigned for specific audience.
No matter what type of loan it is, the terms and considerations of repayment is in compliance with the State and Federal rules, which are implemented to safeguard the consumers from offensive practices like heavy interest rates. If there is any default in the outstanding debts, you have to clearly define the cost that is incurred on the collection of the debt. The same procedure is applied for the promissory notes as well. If you are in a desperate need of wealth or if you want to make your life easy, you must know about all the loans that are available to the meet customer’s needs. The following are some of the consumer loan types.
Types Of Credit
There are two types of consumer credit. They include open-end and closed-end credits. Open-end credit is also known as the revolving credit. It is commonly used for purchases which are on paid monthly instalments. Credit cards, house equity loans and home equity loans for credit are the most commonly used forms in this type. You use credit cards for daily expenses like clothing, food and transportation. Interest charges are incurred if you do not pay the monthly charges at regular intervals. The interest rates are charged depending upon the customer credit score and payment transactions. The interest rate ranges from 0 to 30 percent. Closed-end credits are employed to provide finances for a particular purpose for a stipulated period of time. It is also referred to as instalment loans. Consumers must repay their loans at regular intervals with the interest amounts. Some of the examples of closed-end credits are Car loans, Payday loans, Mortgages, etc.
Different Types Of Loans
- Student loans- These loans are specially assigned for students who wish to pursue higher education. Student loans are of two types. It includes federal student loans and private student loans. Federal student loans are more consumers friendly as it gives lesser interest rates.
- Mortgages- These are loans offered to customers who wish to purchase houses but are unable to pay for them instantly. If you fail to pay the due payments then you might be subjected to risks. It bears lesser interest rates compared to other types of loans.
- Auto loans- Like mortgages these loans are assigned for properties. They help you purchase vehicles and auto mobiles. If you don’t make regular payments you are at higher risks. These loans are provided either by the banks or vehicle dealership companies. Vehicle dealerships will provide higher interest rates to the customers.
· Personal loans- This type of loan is provided for personal uses. These loans depend upon the history of the credit of the consumers. This will be the best option for outstanding loans.