Are you thinking of applying for a loan of money, but do not know which one to choose? Do you see so many different types that you do not have clear which ones are different and which one is better for you? You should know that there are many customers who have sent us messages asking us what are the differences between the types of loans that are in the market. Sometimes, it can be a bit messy and not clear, so we decided to make this post.
Throughout this article you will discover what are the different types of credits and loans that are in the market, what are their main characteristics and where to find the best results in just a few minutes. Stay tuned to make such an important decision!
What is a loan? And a credit?
Before you begin to classify the types of loans that exist, it is important that you know what the difference between loan and credit is. There are small nuances and peculiarities that you must take into account before taking the next step.
A loan is a financial transaction in which the client receives the money he has requested through the internet, in advance. At that moment of application, the time period and the interest rate were established. Therefore, the client must fulfill the contract and, in turn, can enjoy the money requested.
A credit is an economic transaction that works differently. The financial institution puts a quantity of money at the customer’s disposal. The client decides if he wants to have only part or all of it. Thus, it only pays the interest corresponding to the economic amount of the one it is enjoying and not of its totality if it does not use it.
What are the types of loans?
To this day there are a lot of different types of loans that you can opt for. Although there is not only one classification, there are several. Next, let’s focus on two particular classifications. The first is related to the term of the loan, while the second focuses on the purpose for which the money is used.
According to the time frame
Depending on the maturity term chosen to return the money and the interest rate, they can be classified in one type or another.
- Short-term loans. They are the most common. All companies that work through our comparator have this type of expiration. It consists of returning the amount that is enjoyed in less than a year, usually 30 or 45 days.
- Medium term loans. They are more flexible and the economic amount is usually greater, as well as their commissions. The period of time ranges from one to three years, so you can choose when it is best for you.
- Long-term loans. This type of loan is usually approved by banks when they lend a very high amount of money for a business or a home. Your return period is greater than three years, subject to split payments in most cases.
According to the purpose with which you get
This is the most known and used classification, so we will detail each of the types you will find in this category individually.
Personal loans can be requested through our comparator. They are the most demanded since they focus on financing breakdowns, unexpected situations, weddings, vacations, gifts. That is, they are very specific economic amounts that are only needed at a specific moment and can be settled quickly.
LOANS TO CONSUMPTION
This type of economic loans is also very requested, since it focuses on buying a good, such as a car, a household appliance or similar. The amount of money is also usually small, so the return period is also small.
It is a type of personalized loan aimed at students to help them start or finish their studies. Many times they find themselves in difficult situations and there is no one to give them a hand. In addition, we must bear in mind that grants and subsidies are becoming stricter, which is why it is a great help.
In addition to a personal guarantee, these loans are characterized by having a real estate guarantee. Normally they are made with homes. When a person wants to get a flat or a house, what he does is to ask for a loan from the bank since the economic amount is very high. If the person can not take care of it, the financial institution will keep the property, even if there is only one month left to pay.
Other types of loans you can find are the following:
- Mini-loans or mini-loans. They are very small amounts of money to cope with small incidentals or unexpected situations such as a wedding or a weekend getaway.
- Business loans. They are loans designed solely for companies, with the aim of paying off any pending account or moving forward.
Once you know all the types of loans that are in the market, you can decide which one convinces you the most. Of course, we recommend that you first make a quick comparison with our website and choose the best option adapted to you.