January 20, 2020

Types of Loans – What Types of Loans Are There in the Market?

When you need extra money, you can choose from several different types of loans depending on how much you need and what you want to spend the money for. We know that choosing the right loan can be difficult because the supply is so large.

That is why we have collected many types of loans here on the site which you can read more about.

 

Loan Groups

money loans

Loans can be divided into two main groups – credit loans and ordinary money loans. These groups contain several subcategories with several different types of loans.

Below we have divided the loans into these two main categories and you can read more about which loans fit what.

 

Credit loan

Credit loan

The difference between a credit loan and a regular loan is that credit loans give you access to a credit and not money directly deposited into your account. You are granted a credit amount that you can use whenever and however you want and you only pay interest on the amount used.

It can give your finances an extra buffer, so you can feel safe in case you get unforeseen expenses.

 

Buy on credit

When you buy home electronics or appliances on credit, you take out a credit loan on the value of the item. In many cases, these credit loans can be very advantageous, as many sellers offer interest- free credit purchases for up to one year.

But read the terms carefully.

Instead, there may be fixed costs and sometimes you do not own the item until the last payment is made. Before that, the seller may have the right to seize the item if you do not pay off the credit on time. If you know what you want to buy and find a good offer, a credit purchase can facilitate the purchase of expensive items.

Credit card

When you are granted a credit card, you can use the credit anyway. You receive an invoice each month that specifies all purchases during the period. The interest rate for credit cards is often high, but you usually avoid the interest cost if you pay off the entire credit before the due date.

The interest-free period is usually valid for 30, 45 or 60 days.

However, there are often annual fees up to $250. In most cases, you get bonuses or discounts on experiences, restaurants or hotels with a credit card. Since all credit card issuers offer different benefits, choosing the right credit card can be difficult.

Therefore, it is good to investigate the benefits and choose one that suits your lifestyle. You can then save thousands of dollars during the year. A credit card is suitable for those who sometimes want to make large purchases, such as travel and would like to receive bonuses that fit your lifestyle.

Account Credit

If you often find that the money runs out before the salary payment, you can apply for an account credit to cover the recurring shortage. You often pay a setup fee and annual fee, but you only pay the interest if you use the credit. However, you should make sure that you can afford to repay the credit, otherwise the interest rate will tick and it can quickly become very expensive.

An account credit is good if you need a buffer to cover unforeseen costs and can save your finances if needed.

 

Money loans

Money loans

Money loans or regular loans are what most people think of when they hear the word loan. There are also many types of loans in this category. On the one hand there are loans with and without collateral and there are also subcategories in these groups.

SMS loan

When you need to borrow a small amount of money quickly, an SMS loan can be the solution. The most common SMS loans have a maturity of up to 90 days and the loan amount is between $500 and 5000.

Some SMS lenders offer even higher amounts, for example. $20,000. Sometimes you have the right to extend the loan one or more times, but it is expensive to extend the SMS loan and the cost, together with the high interest rate of the SMS loan, can quickly exceed the loan amount itself.

An SMS loan is good if you need extra money temporarily and you know that you can repay the loan on time. With many SMS lenders, you can borrow money without interest for 14 or 30 days, but be sure to also check the terms before you sign the loan. Sometimes there are expensive fees.

 

Private loans without collateral

Most private loans are unsecured. When you borrow money without collateral, you do not have to put your home or other object as collateral and you can use the money exactly as you want.

You can borrow up to $600,000 without collateral, with a maturity of up to 15 years.

The interest rate is set individually and can vary between 3% and 30%.

An unsecured private loan can be used for eg. consumption, the cash addition to a home purchase or renovation of the home.

Other types of unsecured loans are:

  • Instant loans
  • SMS loan
  • unsecured loans

Loan with collateral

You can improve your chances of being granted a loan if you are prepared to borrow with security.

This means that you pledge your home, car or any other item of high value to get better loan terms or be able to borrow a higher amount.

A home loan is an example of a loan with collateral, but you can also find car loan or boat loan as well as regular private loans with collateral.

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