What is a loan? | Personal finance
Types of loans
In general, a loan may or may not be secured, which means that you may be required to pledge a valuable asset at guarantee the loan. Likewise, loans can be classified as revolving, if funds are accessed on a revolving basis, as needed; or over time, when the loan is disbursed as a lump sum and repaid over a specified period of time. Wanna know more about loans? here’s what kind of loans and what are the steps on how to apply a loan.
Secured or unsecured loans
Secured loans are secured by something of value – like a house or a vehicle. If the borrower defaults on the loan, the lender can seize, repossess or otherwise seize the collateral to collect the outstanding loan balance. Since these loans pose less risk to lenders, they are generally characterized by lower interest rates.
Auto loans and home mortgages are common examples of secured loans, but lenders can also make personal loans secured by assets such as a savings account, certificate of deposit, or vehicle.
Unsecured loans, on the other hand, do not require the borrower to pledge any collateral. Here, the lender cannot seize the underlying assets if the borrower defaults. For this reason, interest rates tend to be higher and qualification requirements more stringent. Common examples of unsecured loans include credit cards, student loans and most personal loans.
To obtain a professional credit in order to urgently establish cash, it is generally advisable to turn to your bank. She knows your file and the profile of your company, the steps can be simplified. However, do not limit yourself to this one. Indeed, do not hesitate to approach the competition, you can be satisfied quickly and have everything to gain.
In the case of an urgent need, you will find many banks and multiple financial organizations online, ready to offer you advantageous rates. The ability to search and quote on the internet in just a few clicks saves you time and allows you to quickly learn about the opportunities available to you from different financial providers. You will find that many lending institutions offer you fast credits to meet an urgent need for cash. All you have to do is solicit them and make your choice.
Finally, think about the credit broker! This professional approach the financial organizations for you to get you quickly the best offers available.
Two solutions are generally preferred for professionals who wish to obtain credit quickly to meet an urgent need for cash.
- The revolving credit: its form adapted to the professionals is ideal to palliate an urgent need. It is suitable for all pros, from the artisan to the trader, through the liberal professionals, micro-entrepreneurs or farmers. It allows you to have money quickly, which is automatically recharged after use. However, be aware that this type of borrowing must be scrupulously managed because it can lead to over-indebtedness. In addition, its rates are particularly high.
- Consolidation of credits: this solution consists of gathering your other credits in one to reduce the amount of your monthly payments. This gives you a certain amount that you can allocate to your new project and you can borrow the missing amount at the same time to build up your cash flow.
Whichever formula you choose, consider that signing a credit agreement commits you. You must repay the amount due within the allotted time. However, not all professionals think systematically about their long-term debt, which could jeopardize their financial stability.
Make sure credit is needed before you sign, and that you’ll be able to repay it until it expires in several years.