Popular Types of Loans You Should Know

It turns out that almost everyone has once received a loan to buy something or satisfy a want. Loans are like bananas; they can start green and firm and become mushy if you can’t pay them back at the agreed time frame. Regardless, loans are a good way to buy yourself out of unpleasant situations. So, allow me to explain the most common types of loans you’ll find in a financial institution or a bank.

Personal Loan

Usually, personal loans are categorized as unsecured loans because they do not require pledging an asset for the loan. Examples of personal loans are loans collected to go on a family vacation or buy a new sofa. Personal loans are easy to get, but here’s the rub. They usually have high-interest rates, and the loan itself does not come in enormous amounts.

Small business loans

People looking to start a small business can get small business loans from local banks like Ikano bank. Existing small businesses are not left out of the small business loans as many banks would require a business plan to validate the authenticity of the business. Small business loans involve the borrower pledging assets for the loan.

Student’s loan

For college students, student loans are a great way to finance their education. The silver lining is that the interest rates are fair and reasonable for the lender and the borrower. Also, student loans are usually paid back after the end of the college education and allow the borrowers to focus on their careers.

Auto loans and mortgage loans

In every financial institution, mortgage loans and auto loans are the highest loans given to borrowers. Like the small business loans, they require pledging an asset in case of inability to pay it back at the stipulated time. It also requires proper documentation.