A loan is the sum of an amount of money that an individual or a group of people borrow from someone or a financial institution and is repaid with interest. The lender allows the borrower to use the funds in exchange for an agreed interest rate. People borrow loans to meet their financial needs. We have different types of loans and each one varies from the other because of different factors.
Below are some of the loan options you can consider:
Mortgage loans
These are long-term loans specifically offered for purchasing a house, a plot or real estate properties. The person borrowing the money agrees to pay the lender within a specified time and the property acts as the collateral. Mortgage rates vary depending on the type of property being purchased and the qualifications of the person applying for the loan.
Personal loans
These types of loans are borrowed for a wide range of purposes. They can be used for medical bills and travelling purposes, among others. Personal loans can either be secured, which means you need collateral, or unsecured, which means no collateral is needed. They have a set repayment period with consistent monthly payments. Personal loans typically tend to be short term loans, however depending on the amount, some can be long term loans.
Asset Finance loans
These are loans that finance the purchase of movable assets such as vehicles, heavy machinery, pick-ups, motorcycles, tractors etc. They have fixed interest rates and repayment terms depending on the amount of the loan. It helps applicants to free up cash by enabling them to acquire assets through a simple and fast process. It also offers flexibility as it allows the borrower to utilize the asset while repaying the loan at agreed rates. The asset serves as collateral, and one gets full ownership of the asset once the loan and repayment terms are completed.
Salary loans
This is a short-term loan that one repays when they receive their pay check. It is usually repaid in a single payment. At Family Bank, these loans are available for Family Bank account holders and employees who are paid through Family Bank. Your salary is the security for this loan.
Business loans
In this type of loan, a bank or a financial institution lends money to a business. The money is paid over defined terms with interest and collateral may be required. Interests vary because of various factors like size of the business and loan amount. They can be used for a wide range of business purposes such as boosting capital, covering expenses to maintain cash flow and business expansion. Good financial management in your business will help you improve your business credit score, which will help you when applying for a business loan. Business loans include term loans, working capital loans, micro loans, among others.
Before taking a loan, be sure to take your time to understand the terms of that loan to avoid issues later. You should understand that different loan options come with different terms and conditions.
