Some types of loan can be the way out to fulfill a dream or respond to everyday situations. For example, you may need to exchange an expensive debt for a cheaper one in an emergency or renovate your home.
There are several types of loan, and each one is ideal for a need. And it is always important to know this before applying for credit. Therefore, we list the main options on the market and choose each one without weighing you down.
1. Personal loan
A personal loan is the most popular of credit lines. It has interest rates that vary according to the bank, guarantees, and even the level of bureaucracy. It’s ideal for situations where you’re short on cash and can pay off fast. Thus, it can be used in your home renovation, for any emergency, and even for that trip, you dream of. Please note that some nonbank institutions like Fairstone provide loans to suit people’s borrowing needs. Fairstone partners with a vast network of businesses to deliver flexible retail purchase and automotive financing programs.
But beware! Don’t request for a personal loan you can’t pay. Do the math before accepting credit and never accept a personal greater than a third of your salary.
2. Payroll loan
Payroll loans usually have lower interest rates, as their installments are directly deducted from the salary. Since the bank has more security that it will get the money back, its interest becomes low.
This type of loan is ideal for exchanging an expensive debt for a cheaper one. In general, civil servants, retirees, and pensioners are the most used of this type of credit. But many private companies are also able to partner with banks to offer this loan to their employees.
3. Financing
The financing is within the personal loan line. However, it is used for a specific situation. So when you apply for financing, you need to decide what that money will be used for. The most common reasons are to buy a property called a mortgage or a car referred to as auto loans. The value of this type of loan depends on the price of the good that will be purchased. And the interest rates are usually lower than the personal loan.
4. Consortium
The consortium is a credit line a little different from the others and focused on long-term achievements. You basically pay the bank before purchasing the asset and have the money to buy it in cash. This type of credit is interesting if you want to buy a car in the long term, or even change your house.
5. Credit card
It is the most common type of credit used by everyone. The credit card is a facilitator for credit purchases. Some are ideal for buying that new appliance. Some are best suited to pay for a vehicle overhaul. While some are ideal for paying for a trip you want so much. So you must make sure you choose the one that’s best suited for your particular needs.
In conclusion
To get good credit with affordable interest rates and installments that fit in your pocket, you need to know how to compare these types of loans and find suitable options for your profile.