Loans are one of the financing methods most used by both individuals and companies. Through this system the lender offers an amount to the borrower associated with interest. These interests will be higher or lower depending on the risk of the operation.
The amount of loans that exists is very varied. For this reason, the experts at Crediting wanted to write this article so that our readers know the different types of loans. Would you like to know more about it? In that case, keep reading this post. Let’s start.
Types of loans
Before starting to define the types of loans we would like to make a small call to attention. Since it is not necessary to confuse a loan with a credit, where the client obtains a line of financing that can be accessed for a certain time. In that case, the interest will be associated with the amount you spend.
Regarding loans, we are going to give you a classification that can be useful for you based on two very determining factors : the duration and the purpose of the loan.
Types of loans according to term
One of the most frequent classifications of the types of loans responds to their duration over time. In this way we can divide these financial products into three main groups:
- Long-term loans. All those whose duration exceeds three years are included.
- Medium-term loans. Those loans that range between one year and three years.
- And short-term loans. Those that do not exceed the amortization year.
And finally, types of loans according to purpose
As for the purpose, these products offer a very interesting specialization. In this way, depending on what we need them for, it will be more indebted to go to one type of loan or another.
The most popular types are:
These loans are specially designed for those companies seeking financing. This is quite frequent at different times in a business. Whether at birth, to increase production, to invest in fixed assets or to begin expansion abroad.
Until a few years ago, business loans could only be obtained through banks. Nowadays, however, there are many alternatives. From private equity companies to crowdfunding platforms.
In general we can divide business loans into two main groups:
- Short-term loans. Ideal for those companies that may have certain liquidity problems at any given time. Or for those who need to advance a capital that will amortize in a short time.
- And medium and long-term loans. Best suited for startups that need capital in the long run to start growing and developing.
They are those that are born exclusively to acquire consumer goods. Such as a car or household appliances. In exchange for these loans you do not get money, but the product that we are interested in purchasing.
Consumer loans usually have a non-excessively long repayment term and sometimes include grace periods. The commercial brands themselves are the ones that offer them to sell their products.
They are those loans offered both by treacherous credit institutions, banks and savings banks, and by private equity companies and private lenders. These loans are used to face some economic unforeseen that we must solve quickly. For example, a home repair, an unexpected trip, or even a wedding.
They usually have medium repayment terms and it is advisable not to abuse their use, since interest is somewhat high.
Undoubtedly the loan par excellence that everyone knows. These loans are specially designed to acquire a home or business premises. They are long-term loans that include very low interest.
These are very high amounts, so the economic conditions to be met by the client are very demanding. Banks and savings banks are responsible for offering them. You can find fixed, variable or mixed mortgages depending on the interest.