The modern credit options are so diverse that it is easy to get confused with the variety of offers. In addition, complex credit conditions exacerbated the embarrassment, sometimes even explaining the type of credit and its unlimited possibilities.
At the same time one cashbox Credit is a responsible and serious step in your life, so understanding and understanding the nature of credit is important. It is equally important to recognize your abilities so that your choice does not cause harm or unnecessary fear. On the contrary, it will be a successful financial transaction.
The article discusses the types of credit: consumer or cash credit; Car loans; Car leasing; Re-credit; Maintenance loans; Mortgage loan; quick loans.
Before you start studying any type of loan, we recommend that you familiarize yourself with some basic principles that will help you understand the nature of loans. If you already know the basic principles of the loan and the important criteria to consider when choosing a loan, the link “Personal Loans” will take you to the section that takes a closer look at the first type of loan.
Loans: concept, signs, issue order
A loan is a process of lending money or property to a party over a period of time. The parties to the legal relationship determine the procedures as well as the conditions for the transfer of debt in the form of an agreement, including the useful life of the property and the accrued interest. In addition, loans can be provided free of charge.
The most important types of credit are:
- Ownership – provision of free delivery of the object;
- Consumer (consumer credit);
Interest-free loans are usually made by management to employees, and the state grants certain categories of citizens. Taking into account the primary purpose of financial institutions to generate profit, bank loans always provide accrued interest.
As an advantage of a loan, it should be noted that there is neither an overpayment nor is it linked to the creditworthiness of the borrower.
The main characteristics of loans that differ this type of small loan The standard loans include:
- To transfer the temporarily used property to another person within a certain period, after which the debt will be returned to the owner, moreover, it cannot be replaced with similar items or compensation;
- There is no obligation to pay interest on the use of the property or the rent.
Credit: definition and types
Credit transfer of funds from the lender to the borrower according to the terms of emergency, payment and repayment. In most cases the lender is a banking organization.
According to the loan agreement, any natural person or company can become a borrower. The financing conditions stipulate that the claim amount and the accrued interest are repaid on time.
If the borrower refuses to fulfill his obligations, the lender has the right to initiate enforcement proceedings.
According to different loan methods, loans are divided into the following types:
- Consumers – to purchase goods and services;
- The banking industry offers targeted investments, including leasing and factoring;
- Mortgage loans, means of purchasing residential property;
- Commercial – a form of counterparty interaction that involves the provision of installments or deferred payments;
- Pawn Shops – provide funds secured by liquid securities;
- State – Use low interest rates to fund individuals and legal entities from the state budget.
Loan History – What Is It And How Does It Affect Borrowing?
The credit history is an overview of your financial obligations, including long-term fulfilled and unfulfilled obligations. In addition, it is important to know that creditworthiness also takes into account the accuracy of the payment, including paying utility bills or other services on time.
The credit history is essential as it determines the development of your further financial obligations; in other words, it directly affects your chances of getting the credit you need.
After receiving the loan application, the lender checks the borrower’s credit history against the credit register and, if necessary, contacts the borrower to request further information that can help the lender to evaluate, such as source of income. It should be added that in the absence of work or official income, loans may be refused.
For example, suppose the credit history is negative or the borrower has outstanding debt. Frequent payment delays, a disproportionately high number of outstanding loan liabilities, etc. then reduce the likelihood of obtaining a loan.
Depending on the internal situation of the credit institution, the loan applied for by the borrower may have a higher interest rate with monthly repayment or down payment. However, credit institutions can also deny credit due to damaged credit records.
How do you apply for a loan?
If you could only apply for a loan from a non-bank lender or bank branch, now there are more options and it is much more convenient.
Of course, you can apply for a loan in a known manner by filling out the application form in person at the lender’s office, but this can also be done remotely, for example by telephone or by calling the lender’s customer service department.
The customer service specialist asks the borrower’s questions during the dialogue instead of filling out the application form. However, it should be noted that the borrower must have the right to access data such as passport or electronic ID.
According to the term, loans are divided into short-term (up to 1 year), medium-term (1-3 years) and long-term (over three years). The interest rates can be fixed or variable. In the first variant, the interest on the loan remains unchanged for the entire term of the loan agreement. Researching information and offers is very important, so you must read all terms carefully before signing a contract. If you have any questions, we recommend that you contact an expert who will be happy to explain everything to you in a language that the borrower can understand.