forms of loans

Loans – In their different forms and varied aspects

It takes only a few seconds to write and pronounce the word ‘loan’, but this one word encapsulates an entire world in it. Loans, as we know, fulfill our sundry concerns of short-term and long-term. They are absolutely unavoidable, and with growth in life, we get into situations where we need loans. Something that completes the countless concerns need cannot be anything other than versatile.

This blog is the revelation of many aspects of loans that may or may not be familiar to you. Get enlightened with the information and add another chapter of financial literacy in your knowledge book.

The definition – In the simplest form

A loan is an amount that a person borrows from a finance company to feed any of his big or small financial needs.

Nothing can be more precise in definition than the above one. From this point, you can start the journey to delve into the concept of loans and also their multi-tasking role in human life.

The popular short-term loans

The small financial needs occur more frequently than the bigger ones. Why not take things in that way and understand a bit about short-term loans first.

Mobile text loans: These can be called the smallest and the cutest because you can get them in a jiffy just through a mobile text message. These are among the most sought-after small loans in Ireland because they are last-minute saviours. Through these loans, you can borrow up to €5000.

Unemployed loans: As the term suggests about the meaning, these loans are for those facing money crisis due to job loss. These loans also start from the basic minimum value or Euro 5000, and the maximum depends on the repaying capacity of the borrower.

Debt consolidation loans: These are multi-skilled loans because these encapsulate all the small, scattered debts into one big loan. The benefit? The borrower who was paying multiple installments on high and varied interest rates now has to pay only one installment on a fixed rate. It is for those who lose control of their obligations and are in the situation of multiple debts. These can be from a minimum of €2000 to any maximum of any practicable amount, depending on the lending company.

Bad credit loans – These are not the newcomers now and they are the fighters of a bad time. Thanks to conservative lending policies, it was never easy for the poor credit people to borrow even a small amount. It is only after the rise of FinTech lending that specialized bad credit loans came into existence. The borrowers can get easy approval on a strong repaying capacity. These can start from the basic of Euro 1000 and vary in the maximum amount from Euro 15000 to 25 or 35000. It all depends on the finance company.

Personal loans – Oh, we all know these loans because they are frequent visitors to our financial lives. Free from the constraint of purpose, personal loans are the most popular types of short-term loans. They can extend from a minimum of €5000 – €50,000. These are available for poor credit situation applicants through personal loans in Ireland for bad credit people.

Short-term business loans – These are for the small and start-up business owners to make their ends meet. From working capital needs to the basic infrastructure improvement or any relatable need.

COMMON FACTS ABOUT SHORT-TERM LOANS – All sorts of short-term loans usually have a maximum tenure of 3 years. However, this fact may vary again from one lender to the other. All the small loans are available easily with poor credit situations.

Now the long-term ones

The long-term ones are less in number because the big needs seldom occur, as you can read above. Also, the big needs are limited, house, vehicle, business, etc.

Mortgage – It is the professional term for any kind of property loan. ‘Kind’ means residential and commercial property. These are the huge amount of loans, and the tenure can be from 5 years to 30 years or even more, depending on the age of the applicant.

Car loans – of course, we all know this term because many of us have purchased our dream car just because of the help of car loans. These are a bit different in features when it comes to tenure. They act as the short-term if borrowed for up to 3 years and mid-term if up to 5 years and long-term if more than that. Usually, the maximum tenure for a car loan is 7 years.

Business loans ­– No need to explain much that the loans for commercial purposes are known as long-term business loans. An example can be machine loans however if the machine is small and not very expensive, it becomes a short-term loan.

COMMON FACT ABOUT LONG-TERM LOANS – The interest rate of all the long-term loans is lower than the short-term ones because you have a longer time to pay off.

How can you succeed to get loans at a cheaper rate whether it is a long-term loan or a short-term one?

Well, these tricks can really help you a lot because they are generic in nature, and every time you borrow money, they will help win a ‘win win’ deal. Lower rates bring the happiness of smaller installments, and you get an overall relief because it does not sound hefty on the part of repayments.

The tricks below can help you find more mutual grounds with the lender and get a cheaper loan deal.

Stay disciplined in personal finances – This is the most important thing for any applicant. In fact, it is so important that even when you are not taking any loan, keep the finances in the right situation. Pay debts timely, pay bills timely. These are the two essential aspects. If you can manage these two, almost everything is done.

Save as much as you can – It is basically for long-term loans. Whether it is a mortgage, car loan, or a business loan, the deposit is the first demand. Usually, the minimum is 10% to 15%, but why stick to that limit. If you can save a larger amount, then why not. In fact, it is required because that can help reduce the loan amount and bear a smaller burden of the debt.

Show employment and income stability – More you enter the world of lending, the more you realize the importance of the regularity of the income. Do not change the jobs frequently because, for the lender, it is essential to see that you have a stable career. This fact becomes more important in the case of long-term loans. In the short-term ones where the unemployed loans also exist, obviously, the applicant is jobless.  But in that case, at least show a consistent income source.

What are the signs of a reliable and affordable loan lender?

Usually, it is very difficult for the borrowers to find a genuine lender because they do not know how things work on this part. They perhaps do not understand how to spot a reliable lender that offers affordable loan deals. The concern is bigger in the case of the high-interest debts such as the quick payday loan in Ireland that people avail for extremely urgent needs.

Here are some indications of the loan lenders and you can trust on –

Reasonable arrangement fee: No genuine lender takes a higher arrangement fee from the borrowers. It is against the lending policies. You should always confirm this aspect from the lender before applying for the funds.

No extra cost from poor credit people: This is also a vital element that should be present in the lending strategy of a finance company. The poor credit applicants should have a strong repaying capacity that is all.

Money transfer under the committed time: The genuine loan companies never delay the process without any reason. The procedures are fast with the instant approval decision, and the transfer of money occurs at the right time. If the approval happens, the funds should be sent immediately.

The above types and aspects explain the loans in the right manner and reveal the basic nature that you should always understand. Borrowing decisions should be wise, and for that, one needs to know everything about the related financial products. Isn’t it? Next time when you borrow funds, you can be more sure about what you are selecting for a financial need.

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Representative Example

Amount of credit: €5000 for 48 months at €125.56 per month. Total repayment of €6,026.95. Interest: €1,026.95. APR Interest rate: 9.9%.

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