When it comes to money loans, there are so many types of loans. If you are a finance savvy person, you need to learn about these different types of loans. When you have the proper knowledge, you can make informed decisions. Let’s take a closer look at the four major types of loans below.
Let’s start with payday loans. We are talking about short term loans for small amounts here. As the name suggests, you will be paying back the whole amount on your next payday. When it comes to most payday loans, you are supposed to pay back the full amount within next 14-31 days. Payday loans have higher interest rate compared to normal bank loans. Compared to regular bank loans, payday loans are easy to obtain. In most cases, it won’t take more than 24 hours to have the money in your account. Also, the application process is very simple. You don’t need to go to the physical address of the lender as in the case of banks. You can simply go to the official website of the lender and fill up the form in few minutes’ time. Your application will be approved within next few hours. And you will be having the money on the same day and that is why they are called same day loans. However, you will be eligible only if you have a regular income. Otherwise, they may not show much interest. As for bad credit, this is not going to stop them from giving the amount you need.
As for an installment loan, we mostly mean the traditional bank loans. Here you can go for bigger amounts. Also, they will give you months or years to fully pay the amount. You will be paying back the amount in installments. It involves interest. In the end, you might end up repaying 20-40% of the original loan amount. The problem with installment loans is that they are difficult to get. Banks are very choosy when it comes to such loans. They might reject your application after making you wait for weeks. The application process can be time consuming and tedious. Moreover, you will be asked to submit collateral as well. In case if you have bad credit, they might not be too excited to lend money to you.
Business loans are special purpose loans for starting a new business or invest in an existing business. In most cases, banks provide business loans to those who are looking for them. If you have limited resources you can go for it. But you have to submit collateral to avail business loans. This can complicate the whole process. Business loans are given to small businesses as well as big ones. If your business involves higher risk, you may find it hard to obtain it.
Car title loans
Here we are talking about short-term loans. However, we are not talking about payday loans. However, it is similar to payday loans in many ways. You will get money by pledging your car as collateral. You have to give your car to the lender for obtaining the money. In some cases, they might ask for a second set of keys as well.