Types of Loans That You Should Know About
A loan is a sum of money that is lent to another person from a creditor, and must be returned within the defined dates, along with any interest, if accrued, and as decided by both the parties. However, while the definition may seem quite simple, there are quite a few complications. If you take out a loan for any purpose, you might find that there are plenty of different loan products to choose from. If you aren’t borrowing money from a friend or family member, and need a loan from a professional entity, you will probably be confused. There are quite a few things that you need to know, starting with the various types of loans. In Australia, here are the most popular types of loans that you can choose from.
Many people apply for short-term loans because they need a quick injection of cash to tide themselves over until their next payday. It seems pretty easy, and many companies that offer short-term loans usually provide them without requiring any security. It’s one of the most popular options, and companies like Mango Credit offer a range of options. You can select the payback period accordingly and get the loan sanctioned by simply submitting your documents. It doesn’t take a lot of time, and the process to apply is also incredibly simple. It’s a very popular option for people who just need a small amount.
Then, you have the long-term loans. Negotiated in person, long-term loans are usually given by banks and lenders to entrepreneurs and companies. You will need to present quite a bit of evidence for why you need the loan, and how it will be repaid. In most cases, companies require collateral and an overview of the borrower’s financial statements to gauge whether they are in a position to pay back the loan amount or not. A comprehensive review and due diligence process is carried out before it can be determined whether the loan should be approved or not.
Thirdly, there are title loans. Title loans are given out by private lenders as well as banks, and are designed to provide quick cash to people who don’t have much in the way of collateral. However, you will need to give up the title to your vehicle as collateral if you want this type of loan. Title loans don’t actually require you to give your car away; you can still drive it. However, the title to the vehicle shall be held by the lenders until the loan amount has been repaid.
Because there’s very little security involved and the application process is generally quick, you should definitely consider taking out a title loan. There are other benefits as well; the fee is quite low and your credit history doesn’t come into play, since the loan value is dependent on the value of your car. These are the most popular types of loans that you should know about.