Types of Money Loans

Types of Money Loans

Terms such as money loans, buying on credit and overdrafts are all different ways of borrowing money. Depending on one’s paying capacity, current situation, and credit history, it all matter on type of borrowing method best suits his needs. No matter what type of method one decides to avail, it is very important that repayments are done accordingly.

Before deciding which one from different money loans to avail, it is very essential to make a plan on how to be able to repay the amount before the actual borrowing of the money. A computation of the borrower’s income against all expenses will reflect a disposable amount which will then be allocated for loan repayments. If one must find that his expenses are close to his net monthly income, it is crucial to come up with a feasible plan so it is possible to borrow more. It is also very important that paying loans and credit cards may get in the way if drastic changes happened such as losing a job, or skyrocketing interest rates, or sudden health and emergency expenses.

There are different money loans available to people who are planning to borrow some money. A Secure loan is a type of borrowing scheme where the lender still poses the right to sale the assets as to which the loan is secured if schedule of payments are not met. This type of loan is also called a further advance and functions in a way that the amount being borrowed is made against one’s home. Secured loans are ideal for borrowing large amounts o money.

Another type of loan is an unsecured loan where contract of the said loan or money to be borrowed is only made between parties, the lender and the borrower, are only dependent on a promise made that a loan will be paid. This type of loan is easy to arrange but has bigger risks and higher interest rates. The two parties sets a payment schedule whether the loaned amount is paid in full or in installment and may or may not have an additional fee or interest. Another type of money loan is the Credit Union loan. This type of loan is offered by mutual financial organizations that are owned and managed by members for its members.

In the event that a member has established a record of being a reliable saver he or she will be entitled to a loan but only up to the amount that a member can repay. Members of the union have a certain commonality such as working of a common workplace, member of the same association, or practice the same occupation.

Overdrafts is also a type of loan and functions as safety net on one’s current account. The person is allowed to borrow money within the stated limit whenever the borrower’s bank account ran out of money to cover for immediate and short term money problems. This type of loan has more flexibility because the obligation to repay the loaned amount depends as to whenever the borrower is comfortable to pay them.

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