Loans also known as credit means when you borrow some amount of money either from the bank or from a person for some amount of time that can be years and you owe them a little greater amount by applying interest rate while repaying the loan.
There are both positive and negative impact from a loan, positive like you need to buy a home or pay college fee but you don’t have money, then you can take the loan and owe them a little big amount in future, Negative is when you take loan but you are unable to repay it and now you are in debt. In this article, we are going to discuss various types of bank loans.
Different types of bank loans –
1 – Debt Consolidation loans
A consolidation loan is a little difficult to understand but we’ll try to simplify in easier way. You take a consolidation loan to repay your debt because of any other loans. The loans which are re-payed is generally a credit card loan, you can simply take a consolidation loan from a bank and get out from all your previous debts.
Consolidations loans are not that costly, they charge you a relatively less interest rate with less amount of monthly payments. Consolidation loans are not provided to everyone and in order to check if it is applicable to you, you have to visit a bank.
2 – Student Loans
A student loan is one of the best decisions of taking any loan. Student loan works like this; Imagine you got selected for a college which offers a good placement but the fees is 4 lakh per annum, in this situation you can opt for a student loan in which the bank will pay for your fees and after you complete your college you can repay the loan by working.
They do not have a very huge interest rate and due to student loans, many poor children’s are getting facility to complete their graduation from a reputed college.
3 – Personal loans
Personal loans are the most famous and used loans in any country. In a personal loan, you just take a certain amount of money from the bank for any personal reasons, maybe you just need some money to buy a car or a land or maybe something else.
These kinds of loans usually charge a very huge interest and you have to pay it from the first month when you opt for this loan. In order to opt for a personal loan you have to visit a bank and check your credit score to see up-to what amount you are eligible to take a loan.
4 – Home Equity loans
People who own their own houses can borrow against the amount of equity they have built up in them. That is, they can borrow up to the money that they actually own at that moment.
If half of the mortgage is paid off by them, they can borrow half of the value of the home, or if the home has increased in value by 40%, they can also borrow that amount. In short, it is the difference between the house current fair market value and the amount still owed by them on the mortgage is the actual amount that can be borrowed.
Home-Equity Lines of Credit (HELOCs)
The home-equity line of credit (HELOC) also works like a credit card but instead uses your home as collateral. A maximum amount of credit taken is extended to the borrower. A HELOC can be used by the borrower, repaid, and again used for as long as the owner account stays open, which is typically for 10 to 20 years.
5 – Credit cards
A credit card is a card from which you can buy anything and that actually acts like a personal loan, whenever you buy anything by using your credit card, amount get bundle up with some interest that you can pay later.
If you pay the entire amount at that time then no interest get charged but if you left some amount, interest will be charged. The average rate on a credit card
interest is about 16% at the end of first quarter of 2020.
Credit Card Cash Advances
Credit cards usually include a cash advance feature for their customers. Effectively, anyone who has a credit card of their own has a revolving line of cash for them that can be accessed at any automatic teller machine (ATM).
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