The Credit Counselor: What Types of Loans Are There?

The Credit Counselor: What Types of Loans Are There?

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Loan is not equal to loan. Meanwhile, there are the most diverse forms of credit for every need. Some of them are tied to a specific purpose, while others are free and popular be it for a new car, for your holiday or for something else.

Basically, a distinction is made between the two basic types of personal quick cash loans and bank loans. In the case of a personal loan, it is the case that one person lends money to another, so that, as it were, he assumes the role of the bank. Whether interest must be paid, conclude both parties with each other. But it is also important in this form of credit to conclude a written contract. So legally both are on the safe side.

The other option is the classic way in which the bank lends money to the borrower. In this case, interest is almost always due, but depending on the offer and the financial market, this can vary. Most people choose banking credit because it is versatile and offers a wide range of products so that the right loan can be found for every need.

The most important types of credit at a glance

quick cash

There are countless forms of credit. The most common types and their function are explained in more detail in this article.

Loan on credit score

This is a loan where the bank provides credit to the borrower. In order to receive such a loan, it is imperative that the applicant has sufficient creditworthiness and is otherwise financially secure.

Annuity loan

The annuity loan is a form of credit where the rate of assignment remains constant. It consists of both an interest and a repayment portion. In the course of repayment, the loan amount is lower so the interest portion is gradually lower. In return, the repayment portion maximizes. The result of this is that the rate is always cheaper for the borrower and at the end of the term has almost only pay the repayment portion to the bank.

Guarantee facility

A guarantee loan is a special loan in which the bank provides a kind of guarantee for its customer to a third party. For this, the customer pays a so-called guarantee credit. So he receives no money from the bank, but his willingness to vouch for a specific purpose.

Home loan

This is the classic real estate financing. Who wants to buy a house or build it new, takes a loan, which is usually characterized by a long term and a low interest rate. In most cases, mortgage lending consists of several elements, such as a real loan and a building loan. However, the exact terms and conditions differ from bank to bank and could be agreed individually upon conclusion of the contract.

Building society credit

In this loan, a home savings contract with a bank must first be completed. This gives you the right to make a home loan. How much this is, is usually calculated by the difference between the balance, i.e. the money already paid. For this purpose, interest is still payable to the bank.

Operating loan

This form of credit is primarily intended to provide short-term cash when urgently needed for operating resources. He aims primarily at the financing of so-called current assets. These include, inter alia, mortgages or securities.