What types of loans are there? | Information and tips about moneyOn November 23, 2019 by admin
You are looking for a loan so you want to know what types of loans there are. Because which loan should you choose now. Not all loans are suitable for everyone or for every purchase. This may sound strange, but it is not. For example, it is not convenient to choose a loan to buy a car that has such a long term that your ‘new’ car has already been written off. This sounds logical but is often forgotten.
Many credit providers or banks often give a special name to a loan to indicate what it is used for. Think of a car loan, student loan, renovation loan or the mortgage loan. But all types of loans can actually be traced back to the loan forms below.
Knowing more? We list the loans for you.
What types of loans are there?
The revolving credit is known for its flexibility. The big difference compared to the personal loan is that already repaid amounts can be withdrawn with a revolving credit. In principle, a revolving credit has no monthly repayment. You do, however, pay interest on the outstanding loan amount every month.
Because you do not pay repayments, there is also the danger of a revolving credit. This loan is not suitable for everyone and requires considerable discipline.
A revolving credit is particularly useful if you want to have a financial buffer behind you when you need to have extra money. Buying a car with a revolving credit is therefore not convenient.
The personal loan
The personal loan is perhaps the best known of all types of loans. Sometimes it is also referred to as PL for short. A personal loan is also the most used form of loan that is suitable for many people and purposes. He has a fixed term and interest, so you know in advance when your debts will be free again. And that gives certainty.
This loan form is often used to finance a car. Many people opt for a second mortgage for a renovation, although a PL is also possible.
Red on your checking account
The credit on your checking account is offered by banks. A possibility of being ‘red’ on your checking account is therefore added to your account. This is the most expensive form of all types of loans ! So don’t fall for this and opt for a revolving credit if you regularly need some extra money.
You can therefore be red up to a maximum of the agreed limit. Banks often require in addition to the regular conditions that your salary must be received on this payment account. Many people still choose to be able to be red on their checking account, because they think that then payment cannot be reversed if there is just too little money in the account. It is more convenient to agree on a buffer for yourself that, for example, you maintain a minimum balance of $ 100 in your account.
Purchase by installment
Installment purchase is offered by many mail order companies such as Wehkamp, H&M etc. You can then purchase from them on installment. As with the previous form of credit, installment purchase is very expensive. Fortunately, the AFM has set requirements for these types of loans and the maximum interest rate has been set.
Afterpay is not an installment purchase, but it is a way to make the consumer press the ” Buy Now ” button. After all, you only have to pay the bill later if you have worn the sweater or pants for a long time. The bill is always inconvenient and then a payment arrangement is made with the consumer.
So be careful, because the interest you pay is substantial.
The WOZ credit or mortgage credit
In many respects, the WOZ credit resembles a revolving credit. The only difference is that the applicant must be in possession of his own home. The owner-occupied home therefore serves as collateral or extra security for the loan. The interest rate is therefore generally lower than with a regular revolving credit. There must of course be a surplus value on the home.
You do not have to go to your own bank for a flexible mortgage credit. Also take a look at the lesser-known providers. They also offer the possibility to take out a woz credit.
With a credit card you can make payments that are settled at a later time. This can be in full at the end of the month or you can repay the payment in installments. In the latter case, a loan is entered into. Just like with other loans, you pay a repayment and interest on the part taken up. When you talk about types of loans, the credit card is actually just a revolving credit. After all, you can record the repaid part again and again. Only with the difference that you have to pay monthly repayment.
Types of loans differ
The different types of loans differ on a number of points. For example, you can pay repayment or not or borrow money with or without collateral. Whichever loan form you choose, you should always be well informed and do not make a hasty decision. Request multiple quotes and compare loans.
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