Do you need extra money? Tired of saving for years to buy a new car or apartment? You can continue to deny yourself various benefits, paying urgent bills, and gradually save money for the treasured purchase. And it is possible today to study information about what a bank loan is and, having armed with in-depth knowledge, it is guaranteed to get a loan without refusal.
What is a bank loan?
On the one hand, this is money that is given to the borrower on specific conditions for a fixed period, and on the other hand, certain methods for meeting the financial need stated earlier by any citizen of the country. Many organizations are ready to provide loans, while maintaining the basic principles of credit relations:
- Urgency of the loan,
- terms of paying off.
The violation of at least one rule by one of the parties entails a series of negative consequences for all participants in the financial process. Therefore, think in advance from which funds you will pay off debt obligations. To determine which loan is right for you – you need to understand the types and characteristics of this product.
Classification of credit loans and cash loans
There are many classifications of lending, which determine the purpose, currency, form of provision, volume, etc. This division is determined by several criteria, among which the most common are the following:
- Loan term. There are short-term (up to 12 months), medium-term (from 12 to 36 months) and long-term loans (from 36 months). Short terms are used by various fats cash loan online Philippines companies in order to replenish working capital. For individuals purchasing, for example, small household appliances and for flowing expenses, a short-term loan is applied. Long-term credit is relevant for purchases of real estate, equipment, etc.
- Security. As a rule, money is issued under a certain type of security. This may be a loan secured by real estate, the guarantee of a third party. Those with a good credit history are provided with unsecured loans. Special attention should be paid to the bank guarantee, which represents the issue of an agreement, at the request of the borrower, to pay funds to the beneficiary under conditions of acute need.
- Degree of risk. Distinguish between standard (provided to owners of excellent reputation) and non-standard (high-risk) lending.
- Way of providing. There are three subtypes here. One-time loans (issued by creating a separate contract), permanent (they can be obtained as needed within the limits of the existing limit) and guaranteed (issued by the appointed date).
- Redemption. It can be carried out one-time, broken down into several parts, at the request of the lender. Payments may be made within a clearly defined period, may be delayed or extended.
- Interest rate. May be fixed or floating (provided for in the loan agreement).
- The method of payment of interest. If the agreement provides for an interest rate, the funds paid out at each scheduled payment can be repaid at the time of issue or repayment.
Philippine banks offer more than a dozen loans, which differ among themselves by certain characteristics and names (overdraft, overnight, etc.). However, ordinary customers are offered simple conditions (collateral, with a guarantee, interest-free, consumer).