Today I will show you types of loans
A secured loan is a loan in which the borrower pledges some estate (e.g. property or a car ) as collateral.
A mortgage loan is a very common type of money, used by many individuals to buy things. In this arrangement, the money is used to buy the property. However , the financial institution is given security — a lien on the title to the house — until the mortgage is paid off in full. If the borrower can’t pay the loan, the bank would have the legal right to repossess the house and they can sell it, to recover sums owing to it.
In some cases , a loan taken out to buy a new or used car may be secured by this car, in much the same as a mortgage is secured by home or real estate . The duration of the loan period is considerably shorter — often corresponding to the useful life of the car. There are two types of auto loans, indirect and direct .
- A direct auto loan is where banks give a loan directly to a consumer.
- An indirect auto loan is where a auto dealership acts as an intermediary between the consumer and the bank or financial institution .
Unsecured loans are monetary loans that are not secured against the assets of borrower . They may be available from financial institutions under many different guises or marketing packages:
- credit card debt
- bank overdrafts
- personal loans
- credit facilities or lines of credit
- peer-to-peer lending
- corporate bonds (may be secured or unsecured)
The interest rates applicable to these different forms may vary depending on the borrower and the lender . They may or may not be regulated by law. In the United Kingdom ( UK ) , when applied to individuals, these may come under the Consumer Credit Act 1974.
Interest rates of secured loans are always lower than for usecured loans, because an unsecured lender’s options for recourse against the borrower in the event of default are severely limited . An unsecured lender must proceed the borrower who borrow loans , obtain a money judgment for breakingof contract, and then obsess execution of the judgment against the borrower’s unencumbered assets (that is, the ones not already pledged to secured lenders). In proceeding of insolvency , secured lenders traditionally have priority over unsecured lenders when a court divides up the borrower’s assets. So that a higher interest rate reflects the additional risk that in the case of insolvency, the debt may be difficult to collect. Payment terms are always stated on the invoice.
A subsidized loan is a loan on which the interest is reduced by an explicit or hidden subsidy. In the context of college loans in the US , it refers to a loan on which no interest is accrued while a student remains enrolled in education.
Demand loans are short term loans that are typically in that they do not have fixed dates for repayment and carry a floating interest rate which varies according to the prime lending rate. Demand loans can be “called” for repayment by the lending institution at any time. Demand loans may be secured or unsecured or .
A concessional loan, known as “soft loan ” is granted on terms substantially more generous than market loans either through below-market interest rates, by grace periods or incorporate of both. They may be made by foreign governments to developing countries or may be offered to employees of lending institutions as an employee benefit.