Money can be lent to those in need, at a reasonable rate, from a pool of money that comes from investors and savers. When the lending institution provides money for consumers to borrow, either secured or unsecured, the practice is known as providing a consumer loan. These loans do not include loans such as mortgages, which are reserved for solitary purposes. The different kinds of consumer loans each carry a different set of rules regarding who can borrow, for how long, and so on. What will be available to you will greatly depend upon your credit rating, income and all of the usual measures.
- Personal Line of Credit
These accounts are offered by personnel of the lending institute. These accounts offer a flexible way to use credit, because funds are pulled out as needed, and the interest payment will adjust every month. They are typically only given to worthy creditors, with a maximum placed upon the amount that can be lent. Creditors will also typically offer the prime rate + 1%.
- Overdraft Protection
This account affords protection to a deposit account from being overdrawn. The amount over what is lacking becomes a loan which accumulates interest. This sort of account protection is especially handy, since it allows you to avoid bounced check fees and the other problems that come with having a check or payment not go through.
- Credit Cards
A credit card is in effect a loan system, where instead of purchasing items yourself, the credit card company pays for your item, and you then become responsible for paying the company back, usually with an interest applied.
- Credit Card Cash Advances
Available from their credit card, these loans are known as cash advances. These loans immediately begin to accumulate interest, which is typically higher than for a cash advance on a credit card. These enable you to get cash in hand, but at the cost of a much higher interest rate than for an actual cash load or line of credit.
- Demand Loan
If the borrower has good credit, then they may be able to arrange for a demand loan. These loans require an agreement to repay in full by a certain date, while just the interest is due monthly and the lender can recall the loan at any time.
- Installment Loans
These loans offer a set interest rate, a repayment schedule, a maturity date, and can require certain security features. Basically, it is a set number of payments of a set amount that you are required to pay.
These are a few of the kinds of loans that a person can get through a financial institution. There are other kinds of loans available that have other rules to their use. What will be available to you will greatly depend upon you credit score and situation, what you can offer as collateral, the amount of income you possess, and much more.
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Originally posted 2009-03-23 05:53:38. Republished by Blog Post Promoter
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1 comment so far ↓
I think that loans are only an option if you have mastered how to manage money. If people take out loans and have not figured out why they are in debt in the first place then it could be quite a bad situation.
I have had many clients that wanted to take on more debt to try and “solve” their situation. I told them not until they understand and change their habits.
Cheers!
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