A loan simply refers to a lump sum of money borrowed, which should be paid either over time or all at once. Interest is usually charged on the loan. There are various factors which determine the amount of loan that you can get. Examples include income amount, existing debts, and credit history among many others. There are also many different types of loans which you can borrow. It is important to know all your options and choose the one that meets your needs the best. Below are some of the basic loan types.
Open-ended loans and closed-ended loans
The open-ended loans
The open-ended loans refer to the ones which can be borrowed many times over. Lines of credit and credit cards are two good examples of the open-ended loans. As much as you can borrow many as many times as you want, there is a limit to the maximum amount which you can borrow. That means that your available credit decreases each time you borrow and increase each time you make a repayment.
The closed-ended loans refer to those that can only be borrowed once. You then have to make payments on the loan, either all at once or in installments. You will not have any credit available to use on the closed-ended loans. However, you can get another loan, which will require going through the entire approval process again. Auto loans, mortgages and student loans are examples of the closed-ended loans.
Secured and unsecured loans
Secured loans refer to those which require you to place collateral for the loan. The lender will take possession of the asset if you are unable to repay the loan. The value of the asset has to be confirmed formally before the approval process can begin. The limit of the loan amount that you can borrow will be dictated by the value of your asset. A good example is a title loan.
These simply refer to the loans that require no collateral. They might be a bit more difficult to get and in most cases, will have a higher interest rate compared to the secured loans. You income status and credit history are the criteria used to determine if you qualify for the loan as well as the amount that you can get. When you låne penger and default on payments, the lender might have to use debt collectors or file a lawsuit if he wants to recover the loan.
Everybody wants to access easy loans whenever he or she has an emergency. Access to quick loans has not been easy but thanks to technology because now you can process a loan and have the cash in your hands within a few hours. Instant online loans have proven to be helpful in times emergency than any other form of borrowing. But to qualify for this 1 hour loans you need to have a good credit record and a job. There are government bodies that monitor credit score for different individuals. This online lending platform work hand in hand with this registration firms to make sure that an individual is qualified for a loan. Therefore to have access to this quick loans you should make sure you are on the right books. If you are trying to access a loan, here are some tips for choosing a online loan website.
Whenever you have an emergency, time is of the essence. You need access to funds as soon as possible. Online lending sites have proven to be reliable, most can give you a loan in a matter of hours. This gets better with time because after the first few transactions you will be able to get a loan within a few minutes. However, you should know your preferred online lender’s loan processing period in case of an emergency.
Before you accept the cash, you need to know the repayment period. You should always pay your loan on time. Paying on time improves your credit score, this qualifies you for more funds whenever you need them. Defaulting on a loan from one lending site may disqualify you from accessing more from other lending sites.
When asking for a loan, know in advance how much you are going to pay back. Different lending sites have different interest rates. The rates also increase depending on the duration you will take to pay back your loan. You should choose a website with the lowest interest rate. And always make sure you pay within the shortest time possible.
In case of defaulting
It is always good to be prepared for the worst. Know that if you default on paying back your loan, your credit score will be affected. When you are about to default on payment, and you are not sure of what to do, just call your lender’s customer care and ask them to extend your payment period. However, this will be at an extra cost to you.