There are so many different forms that a loan for a consumer can take. Each type of debt comes with its own set of potential advantages – and of pitfalls too.
Some of the Main Types of Personal Loan
Based on your financial history, this card and its associated financial account will provide you with a loan of a certain amount (say, $10, 000) which you then need to pay back, with interest, in fixed instalments. It is important to pay up on time, as financial penalties apply for late and missed payments.
These can be described a similar to the cards just described, but they are attached to a particular store. With a store card, you will be given a loan of a fixed amount to spend up front at a given store.
You will then be required to pay it back, with interest, in fixed instalments. Again, there will be penalties, usually in the form of fixed charges and higher interest, if you fail to pay off your instalments in time.
A mortgage is a type of personal loan that you are given by a mortgage broker to help you to buy a house. Once you have paid off every instalment of the mortgage, along with its associated interest, you will be able to say that you truly own your property.
Bank Loans/Personal Loan
Sometimes these are interest free, and sometimes they come with interest. This is money that your bank provides you with, usually for a specific project, such as starting up a business. You then come to an agreement with your bank about how you will pay the loaned money back to them.