debt, loan, credit

the most common types of loans

here are the most common types of loans that you need to know about

Choose the best type for your economy. Borrowed funds are used for many purposes, from financing a new project to buying a letter stamp. But with the variety of available loans, which type of best? Why should we take the loan?

The following are the most common types of loans and how they work.

Personal loans:

Most banks and direct online services or the Main Street lending program allow personal loans and use these amounts for almost everything from buying a smart screen to paying bills. This method is expensive to obtain money because the loan is not guaranteed, which means that the borrower does not offer any reportable collateral if it fails to pay, as is the case with a car loan or a housing loan. A personal loan can often be obtained from a few hundred to a few thousand dollars, provided that it is paid within 2-5 years.

Borrowers need some documentation to prove income and property proof, which must be at least equal to the amount borrowed. The request is generally one or two pages long and takes only a few days to approve or reject.

Best and worst prices:

According to the Fed, the 24-month average Commercialbank loan rate was 10.21% in the fourth quarter of 2019, and the interest rate could be three times larger. The annual interest rate for personal loans ranges from 9.95% to 35.99%.

Only people with an excellent credit rating and highly significant assets can get the best ratio. The worst proportion falls on those without additional options.

A personal loan is a right solution for those who want to borrow relatively small amounts and pay within two years.

Bank Loan for Bank guarantee:

A bank loan is not the same as a bank guarantee. A bank can issue a warrant to a third party – a contract – on behalf of one of its customers. If the customer fails to complete the contractual obligation with the third party, the latter asks the bank to pay. The guarantee is a settlement for the bank’s small business customers.

An enterprise or company may accept an offer from a contractor, but provided that the contractor’s bank issues the payment guarantees in the event of the contractor’s breach of the contract.

Credit cards:

The consumer gets a personal loan each time they are paid by credit card. There are no benefits to pay if the consumer pays the full credit used immediately. But if part of the debt remains unpaid, monthly interest will be charged until the full amount is paid.

The credit card interest rate was 16.88% per year at the end of the fourth quarter of 2019. This ratio is slightly lower than the second quarter of 2019, at 17.14%, and at the end of the fourth quarter of the same year, the ratio was 16.86%.

The fine may be inflated to a much higher value for consumers who have not paid a single amount. It could be at least 31.49% of HSBC’s credit cards.

Understand the different types of loans – the best type of loans that suit your economic situation – bank loan versus bank guarantee – credit cards

Renewed debt:

The big difference between a credit card and a personal loan is that the card represents a renewed debt, as the cardholder can borrow money to the extent that it is allowed to repeat and pay later.

Credit cards are very comfortable. It requires self-commitment to avoid overspending.

Studies have shown that consumers are more likely to spend when they use the card instead of liquid money. A one-page request that makes things comfortable and gets $5,000 to $10,000 credit.

Real-estate loans:

Those with full ownership of their homes can borrow against the current market value of the real property. So they can borrow at the equivalent of the value of what they own. If you pay half the value of the mortgage, then these people can borrow the equivalent of half the value of the house, or if the home value increases by 50%, then they can borrow the percentage of that increase. In short, the difference between the value of the home in the current open market and the amount still owed to the mortgage is the amount that can be borrowed.

Less interest, greater risk:

The only positive thing about a housing loan is that the interest rate is much lower than on a personal loan. A survey conducted by showed the average interest rate for a residential loan at a fixed rate of 15 years as of February 5, 2020, was 5.82%.

As a result of the changes in 2017 from the reduction in income tax rates, interest on a residential loan is only a tax cut. The borrowed money is used to buy, build, or significantly improve the taxpayer’s house. Which in turn protects the loan, according to the U.S. income Tax Office. The downside is that the house is a loan, and the borrower may lose his home if the loan defaults.

The loan proceeds may be used for any purpose but are often used to update or expand the house. A consumer interested in housing loans should always remember two lessons from the 2008-2009 economic crisis:

The value of homes may fall or rise.
Jobs are at risk in an economic downturn.
Credit facilities for property rights
A credit facility for property rights works and a credit card, but in this case, the home uses a guarantee. The maximum amount of credit extended to the borrower, as such facilities can be utilized, repaid, or reused as long as the account is open, usually 10 to 20 years.

In the case of credit facilities, interest is tax-free, such as regular equity loans. Still, on the contrary, the interest rate is not fixed when the loan is approved, as the borrower has access to money at any time over the years. Hence, the interest rate is variable, usually linked to a benchmark, as a distinct interest rate.

Good or bad news:

The variable interest rate may be good or bad news; during high prices, interest charges will increase on the outstanding balance. A homeowner who borrows money to install a new kitchen and pays that cash over several years may stumble by paying more than expected benefits only because the distinguished interest rate has increased. The other downside is that the available credit facilities may be plentiful, and the initial prices are very attractive, so the consumer may easily be satisfied with these offers.

Credit Card Cash advances:

Credit cards usually include cash advances, anyone with a credit card with a renewed cash balance available at any ATM. This method is costly to get money.

For example, the interest on cash advances when using a Forteva credit card is 25-36%, depending on the type of credit you have chosen.

Cash advances are also charged, typically 3-5% of the passage or $10