Classification of loans you should know about
There is not only a classification of the types of loans. We can organize them according to different criteria, for example, depending on the destination, the guarantee, the recipient of the loan, the lender, the concession time, the amount granted, the guarantee or the required requirements, etc. In this article we will focus on the two most common classifications: types of loans according to the term of maturity and according to the purpose of the money. Click here for payday loans belfast.
Types of loans according to the term of maturity
-Short-term loans. Loans granted for a maximum period of one year.
-Medium term loans. Loans in which the maturity ranges between one year and three years.
-Long-term loans. Loans whose repayment term is greater than three years. Visit this site for payday loans belfast.
Types of loans according to destination or purpose
These loans are used to finance specific needs at a given time. They are usually small amounts that are used to finance unexpected expenses, travel, repairs, weddings, etc.
Consumer loans are used to finance consumer durables such as cars, furniture or appliances.
Both personal loans and consumer loans are usually smaller loans with a relatively short repayment term.
These types of loans are very popular in the United Kingdom and the United States, although their use is becoming globalized. These are loans aimed at financing university fees, postgraduate studies or master’s degrees. Interest rates on student loans are cheaper than personal loans.
In these loans, an entity leaves money based on a real guarantee, which consists of the mortgage of a real estate (home, parking space, storage room, premises, site, etc.). It is about medium-long term loans (between 15 and 30 years). We can find different types of mortgage loans depending on the interest rate (fixed, variable or mixed), the type of fee we pay or the type of currency in which the loan is paid (normal or in foreign currency).