Loans refer to the borrowing of an amount made by a borrower from a lender. The amount of loan is paid back in installments and for the amount given on loan the lender charges the borrower an extra cost known as the interest on the loan. In the present economic scenario, loans have come to play a very vital role as they make possible to purchase an asset or carry out business activities even if the business is a little short of funds in the present.
Loans are provided by various agencies, banks and financial institutions. Loans may be broadly classified into secured loans and unsecured loans. Secured loans are loans that are given against some security like for example a housing loan, whereas an unsecured loan does not require any collateral to be provided like for example the amount extended on a credit.
There are loans of various types catering to the various needs of an individual or a business. You must have your requirement clear in mind and choose a loan that gives you the maximum benefits in terms of the rate of interest, the term of the loan and other terms and conditions. The loans may be classified into the following types based on the requirement that they cater to:
Auto Loan: Auto loans help you to make your dream of owning, lovely car or any other vehicle come true. The auto loan may be got either from the car dealer or a bank or any other financial institution.
Personal Loans: Personal loans can be taken for funding any personal reasons. Personal loans have a higher rate of interest and work out quite expensive although they provide a great relief at the time of need.
Home Loans: Home loans make financing the home a rather simple task. The installments can be paid monthly as convenient and decided upon with the lender.
Education Loans: Education Loans help you support your education and generally have a comparatively lower rate of interest. Education loans give you enough time to finish your education and a few months to find a good job before starting the repayment on the job.
There are several other loans like debt consolidation loan, which help you to consolidate your debts into one single loan.
Loans differ in the period for which they are extended too. They are provided for short-term, medium term and long term needs. The requirements of short term can be met by payday loans, which help you to tide over your needs till payday. These loans are easily available and are processed very fast. Loans, which involve higher amounts and longer terms generally, require a collateral security to be provided for the same.
Loans make it possible to meet our needs, which would otherwise not be possible due to shortage of cash. Loans are thus, the right solution to meet the requirements.
There are a number of companies, banks and other institutions that offer loans of various types. The Internet makes the process of getting a loan even simpler as you can now get all the information and even apply and get a loan processed sitting in the comfort and convenience of your home. It would be advisable to conduct a proper survey regarding the loans available, the rate of interest, term of the loan and the other terms and conditions before actually taking a loan. You must first make all the necessary enquiries before taking a loan so as to ensure that you are taking the loan from the right party that would be a help to you and not be a source of further problems.
A loan that is taken from a good institution would be of great help to you during your time of need , only thing you should ensure that the amount and the rate of interest involved is such that you would be able to repay without getting yourself into a debt trap.