There are a number of different types of loans offered by banks and other financial institutions. The major types of loans are credit cards, personal loans, home loans, and auto loans. Each of these types has its own APR, dollar amount, and payoff timeframe. The majority of loan types require the borrower to make an upfront payment and pay the loan back over time. Credit-builder loans are an exception to this rule.
Other types of business loans are available for the purpose of daily expenses, such as salaries. These loans may be called Flexi loans because they allow borrowers to prepay the principal amount when extra cash becomes available. Flexi loans save borrowers up to 45% on EMIs. These loans are available from banks as well as online lenders. Flexi loans allow borrowers to pay only the interest and no principal, and you can repay the loan early if you have the extra cash.
Personal loans are available in two types: secured and unsecured. A secured loan is backed by a valuable asset, such as a home or other property. This type of loan usually comes with lower interest rates than unsecured loans, but it is important to note that your collateral is at risk in case you fail to repay the loan. If you’re borrowing from a friend or relative, make sure that you sign a promissory note so that you don’t have to worry about missing a payment.
The other type of loan is an open-ended one. These loans can be used over again. Some people choose to use these loans to pay for their expenses. Another type of loan that has an open-ended term is a credit card or line of credit. In these loans, the borrower can borrow up to a set limit, but it will decrease with every payment. This type of loan is often used to apply for a mortgage or to cover a large expense.
A line of credit is similar to a credit card, but without a physical card. A line of credit is set up as an unlimited amount of money from a bank or credit union, which is available for ongoing working capital or other cash needs. It works like a checking account, and the holder receives a checkbook so they can write checks without dipping into cash. Some providers allow you to use a debit card or even cash withdrawals to make purchases. Lines of credit must be repaid with interest, and are renewable for periods of time from 90 days to several years.