Not that long ago general households had limited number of choices regards consumer credit opportunities. Far back, many state regulations have restricted different types of loans as well as interest rates financial institutions could offer to attract more customers.
However, now days new companies have entered the market and various innovative financial products and services were introduced.
Common Types of Loans:
- Secured Loans: are loans, which are secured by your personal assets. Such as automobiles, boats, properties and so on. If you don’t pay the loan back within previously negotiated period of time, the lender has the right to seize your assets.
- Unsecured Loans: are simply loans that are not secured by any collateral. This type of loan is also known as signature loan. Credit cards are the common examples of unsecured debts.
- Short-term Loans: are loans, with no more than three years in length. These loans are generally used to acquire small capital or goods. They have fixed interest rates and must be secured by your capital.
- Long-term Loans: are loans that vary in length but, which should be at least three years long. These loans must also be secured by your assets. The loans have variable interest rates and penalty fees.