A loan is a sum of money which is borrowed from an institution to manage planned or unplanned events. Planned events include marriages and home renovations. Unplanned events on the other hand may include funerals or accidents. There are money lenders that offer services good at money lending in toa Payoh Singapore. It is important to note that there are different types of loans available on the basis of requirements. Loans can be granted to individuals, governments and institutions using different or same sets of conditions depending upon the requirement type.
Types of loan
Loan types are classified into mainly two categories:
- Secured and Unsecured loans
- Open-end and closed-end loans.
Below are the types explained in detail.
Secure loans
Secured loans are loans where the collateral is kept in exchange for the loan amount. It may include your investments, bonds, property papers, etc. The reasons may include higher education, marriage expenses or building construction. Such loan types are further bifurcated into home loans, loans against mutual funds or shares, etc.
Unsecured loans
An unsecured loan is the opposite of a secure loan, where a person does not need to present any collateral. To apply for an unsecured loan, the lender will ask for your employment status and income proof. It helps the lender assess whether you are capable of repaying the loan amount. These loans consist of types such as personal loans and short-term business loans.
Open-end loans
Open-end loans are the ones which do not have a definite end date. Lines of credit and credit cards are included in the open-end loans. The main terms of an open-end loan will depend on credit score.
Closed-end loans
In a closed-end loan, a specific date is given on which the debtor needs to repay the entire loan with interest. In these loan types, some item is kept in possession of the lender until the grand total amount (interest included) is repaid.
Conclusion
Loans should be taken only when you are in genuine need of money for legit reasons. Any money taken on credit is a headache until repaid. otherwise, it can act totally opposite of what you imagined. Many times it happens that people tend to take loans for smaller purposes which actually do not require taking loans and later lay the extra interest. There are different types of loans available to match your needs one should look at and evaluate them.