When you are applying for loans, you have to be very careful. The financial infrastructure comes with a lot of riddles that need to be studied properly before you reach a decision. This is why it is also important to look for a proper adviser. It is understandable that people need to be able to pay their monthly bills and look after themselves. But often so when we do not have enough amount of money we are at a loss because we do not know what to do. This is when loans come in as useful. However, there are several types of loans out there that you can make use of.
If you have bad credit do not worry. You will not be able to apply for the regular loans because the lenders will not consider you to be a safe borrower to give money to. But you can then apply for bad credit a loan which means that if your credit score is below 500, you can easily ask some lenders to offer you money. However, these loans do come with high interest. The good part about this deal is that if you take bad credit loans for a small amount of money, you can pay them back quickly within the deadline and thus improve your credit score.
If you are tired of having so many lenders following you around to your workplace or home, it is important that you start thinking smart. Ti is also advisable not to have many lenders at the same time because too many calculations might confuse you and you might forget whom you have already paid and whom you have not. This is why you must take a debt consolidation loan from one main lender and pay all your debts. This way you will owe money to only one person which is a situation that is easier to handle. Sometimes you may just be able to get over your financial crisis with bridging loans. This loan is very helpful when you have an existing amount of money after selling your existing property, but you still need a little bit more to be able to buy the new property. So in a way this loan is bridging the gap. This way you do not need to borrow a huge sum of money that might be hard to pay back on time.
If you want to start a new business, be it small or large, you can trust business loans to get the necessary boost initially to make it. These loans would give you the proper amount of budget to make your initial investments, like in buying products, to begin with, and also the labor force if you need any. You can pay these loans back once your business starts doing well and you make enough profit.
The choice between one and the other type of credit depends on your intention. In any case, it is always advisable to ask for multiple proposals and compare them with each other
Loan on installment
Example: Financing renovation works on your home.
Benefits
• You know in advance the term of the credit and the monthly repayment amount.
• You know exactly how much you pay and you know the total cost of the credit in advance. The maximum rates of an installment loan are less than those of a credit facility.
Tip: to finance renovation work on your home, a mortgage loan can be more interesting in terms of interest rates and tax benefits
Cons
• The amount to be repaid and the term are fixed.
• You must repay the anticipated amount on the agreed dates.
Appropriations for an amount are generally more expensive since the applied rate is usually equal to the maximum rates as provided for in the law.
Sale on payment
Example: You buy in the supermarket a television through a loan granted by the supermarket.
Benefits
• You buy a clearly identified good or a clearly identified service.
• You know in advance the term of the credit and the monthly repayment amount.
• You know exactly how much you pay and you know the total cost of the credit in advance.
• The rate can be interesting because the lender can have certainty.
The contract for example,” retention” contains, i.e. a clause to the effect that you own only when you have fully repaid the loan. This reduces the lender’s risk since he can retrieve the purchased item just as you do not pay. This allows him to propose a lower rate.
Cons
• The amount to be repaid and the term are fixed.
• You must repay the anticipated amounts on the agreed dates
Financing rent (Hire purchase)
Example: You buy a new vehicle without necessarily being the owner of it.
Benefits
• Low fare.
Cons
• At the end of the credit, you are not the owner of the good that the credit is intended for.
If you want to become the owner of it, you have to pay an additional amount. That amount is called the residual value.
You are more likely to borrow again as you can use the credit freely and because the monthly repayment amount is lower than with a loan/sale on installment.
