Personal loans | The “wild card” for some shopping
Making ends meet is often difficult. Mortgage, utilities, telephone, gas, food … the amount of bills to pay every month is long. So it is very common to reach the end of the month to count to 0 or even negative. The number of people who have a credit card is numerous and many are turning to it. However, “pull card” is not free, you have to pay interest, and sometimes with a vengeance. But sometimes, a credit is not sufficient or is not as described. In this case, Personal loans take center stage.
There is a wide range of them, and the basic difference is the purpose for which they are intended. The best known are mortgage loans, for the purchase of a home. Although it is also very common request one to change cars. Furnish the living room or pay for a trip are other reasons why loans to banks are requested.
What is a loan?
The loan is a transaction by which a bank lends to a person or persons an amount of money that must be repaid, with a previously agreed interest within a period of time. Most often repay a loan in several monthly installments and interest which is included.
Banks are free to apply charges. But prior to collection, should send the Mother Bank a document where they are reflected. In addition, every time you change must send to the agency the heading where the change appears.
What types of personal loans can find me?
Buy a house, deal with a sudden expense or buy an appliance are several reasons that can “force” a person to apply for a loan. It is goods or services with a high cost. So unless you have savings, they are very difficult to buy directly and in a single payment. Hence the importance of these financing instruments.
Major loans can be found in most banks are mortgage and personal. The main difference, besides its purpose, is that the latter is not always necessary to provide a guarantee otherwise than as generic guarantee generally have a good present or future, or lack of it.
Since travel to study
Personal loans are aimed at satisfying a particular need type that occurs at a particular time. They are focused on paying intangibles, like a journey, or tangible, like a washing machine. Although the differences between them are tiny, they are taken into account when choosing between a loan or another.
Types of personal loans
Auto Loan: intended for purchasing a vehicle. The loan repayment period is usually between 5 and 8 years.
Study loan: aimed at defraying the expenses associated college tuition, a master or a course abroad, among others.
Home Loan Reform: money to carry out reforms at home.
Consumer loan: available in a large number of retail outlets and establishments. It is to offer the opportunity to purchase one of their properties (TV, computer, electrical appliances …) a high cost and pay for 6, 12 or 18 months at 0% interest.
Payroll Advance Loan: it consists of a sum of money advanced by the bank and which is proportional to the payroll.
Travel loan: in order to finance a trip. It would include a personal loan in kind.
A curious case is that of consumer loans. Some entities consider a type of personal loan and thus offered in its catalog. Others see it as a different personal loan, although the line between them is very thin.
What personal loans are characterized?
The amount requested, the repayment terms or interest rates are often the main differences between loans and others. Such loans are a number much lower than those for the purchase of a home, a few times under a higher interest return though. The Variable Rate is usually between 8 and 14%.
Interest: it can be fixed, the uncertainty is removed and the customer always knows what he has to pay, or varying, mode in which the type is modified depending on the evolution of the index has been taken as reference. It is also possible to combine both, this mode is called mixed.
Flexibility: there are entities that allow customers to change the financial terms of the loan over time. Extend the repayment period, increase or decrease the amounts of the fees … the more flexible you are a more expensive loan it is usually.
Commission study: payment to the bank for the efforts and study for verification of solvency. Usually a percentage of the amount requested.
Opening commission: is usually paid in a single installment and the amount that is payable to the institution by carrying out the necessary steps to grant the loan.
TAE: the actual cost of the loan once all loan expenditures are added.
Lack: initial period in which the loan is not amortized but payment will be allocated entirely to interest payments. This is not the most widely used if it is not the “French”, in which each installment includes a portion of interest and other amortized capital.
All these features are usually common to loans but need not be present at all. They may or may not grace period, be more flexible and less or no interest rates can vary greatly from one company or another.
The downside of loans: in the end a car that has a starting price of 10,000 ends up costing 13,000 how is it possible? Because the amount owed to the bank must be added the interest payment. But it’s the way to enjoy the short or medium term which would not be possible otherwise.