How many types of bank loans are there?

Among the different products that bank branches can offer us, loans are the most requested by today's consumer. Without these types of products it would be very difficult to carry out different activities. There are different types of bank loans and it is important to know their nature.

What is a bank loan?

A loan is a sum of money borrowed from the bank to help with certain planned or unplanned events. The borrower must repay the loan, including the interest charged over a stipulated period.

The user requests an amount of capital from a financial institution, it will evaluate their situation and will accept or not their request. Once accepted, the consumer must return the amount in stipulated terms plus commission.

It is important to note that the use of a bank loan should help solve a situation and not aggravate it. For this reason, maximum responsibility and prudence is recommended when making a decision of this style.

For different situations there are different types of bank loans , each with its specific characteristics. Let's see what they are and their special characteristics.

Types of bank loans

There are many reasons for requesting money from banks. All these causes are of a very different nature and there is a type of bank loan for each one.

In theory, each loan is designed for a more or less specific activity. Thus, banks offer the following types of bank loans:

• Personal Loans . It is a type of loan requested to cover specific money needs and at a certain time. They are usually in small amounts to take a trip,pay for a wedding , etc. More and more people are turning to these types of bank loans to meet these needs. They usually have short-term repayment terms in tune with the lowest amount borrowed.
• Consumer loans . These banking products are often used to finance durable products or services. The purchase of a car, an appliance etc. They are loans of rather low amounts to be repaid in short spaces of time. They are also products in great demand and used by today's society.
• Student loans . It is probably the least known type of bank loans, in countries such as the United Kingdom and the United States they are very common products and that are highly effective. As their name suggests, they are products to finance courses , scholarships or study fees and to facilitate academic training.
• Mortgage loans . It is a loan secured by property or real estate, called a mortgage. In exchange for the funds received, the bank obtains a promise from that buyer to return the funds within a certain period of time for a certain cost. The mortgage is legally binding and ensures the right to have a legal claim against the borrower's home if the borrower does not comply with the terms of the mortgage contract. Basically, the borrower owns the home, but the lender owns it until it is completely paid off.

Advantages and disadvantages of bank loans

As we have said before, each bank loan has its own nature and characteristics. The repayment of the loans is one of the factors that differentiate between them. That is why it is important to know what advantages and disadvantages come with applying for a bank loan.

Advantage

Bank loans are designed to facilitate certain financial activities, from there it is possible to obtain certain advantages:

• Flexibility. Generally, with bank loans, you just have to worry about making regular installment payments on time. Banks generally do not monitor how you use a loan as long as you make your payments.
• Profitable . Although at first glance it may not seem like it, bank loans pay off. In terms of interest rates, bank loans are usually the cheapest option compared to other options.
• Fiscal benefits. When you use a bank loan for business reasons, the interest you pay on the loan is a tax deductible expense.

Disadvantages

But you also have to be careful of the disadvantages that are distilled from the characteristics of bank loans :

• Strict requirements : Because many bank loans require some form of collateral, new and existing businesses with no assets may have a difficult time approving their loan applications. If these borrowers opt for unsecured loans, they suffer higher interest rates.
• Periodic payments . Any type of loan carries periodic (monthly) payments. Those who fall behind in payments face the possibility of having their assets garnished. Even if you manage to make late payments, your bank may still report it to the defaulter offices, a measure that negatively affects your credit score.
• Irregular payment amounts. In the case of obtaining a bank loan with a variable interest rate, the rate changes according to market conditions. This makes it difficult to determine the exact amount of future payments.

Alternative to a bank loan

If for some reason you cannot access a bank loan or its offer does not meet your expectations , check the offer of non-bank loans available online. We have collected the best offers on the market and have verified their security.

See opinions	7 - 30 days term	$ 50 - $ 300 maximum first loan	Yes free first loan	Yes Supports Credit Checker	" APPLY FOR "
See opinions	1 - 48 months term	$ 50 - $ 7,500 maximum first loan	No free first loan	No Supports Credit Checker	" APPLY FOR "
See opinions	91 - 120 days term	$ 100 - $ 1,000 maximum first loan	Yes ? Varies by lender free first loan	Yes Supports Credit Checker	" APPLY FOR "
See opinions	61 - 120 days term	$ 50 - $ 300 maximum first loan	Yes free first loan	Yes Supports Credit Checker	" APPLY FOR "
See opinions	6 - 60 months term	$ 500 - $ 10,000 maximum first loan	Yes ? varies by lender free first loan	Yes Supports Credit Checker	" APPLY FOR "

When facing bank loans, you must act prudently and have good information about the different types of bank loans to minimize risks.