Do you need any additional funds? Tired of saving up for years for a new car or apartment? You can continue to deny yourself various benefits, paying urgent bills, and gradually save money for the cherished purchase. Or you can already study the information about what a bank loan is and armed with in-depth knowledge, it is guaranteed to issue a loan without refusal. And if you have problems with loan repayment, you can study debt relief programs.
What is a bank loan
On the one hand, it is money that is given to the borrower on specific terms and conditions for a specified period, and on the other hand – certain methods to meet the financial need previously declared by any citizen of the country. Many organizations are ready to provide the loan, and the basic principles of credit relations should be preserved: urgency, payment and repayment. Violation of at least one rule by one party entails a number of negative consequences for all participants in the financial process. Therefore, think over in advance from which funds you will repay the debt obligations. To determine what loan is right for you – you need to understand the types and characteristics of this product.
Classification of loans
There are many classifications of lending that determine the purpose, currency, form of granting, amount, etc. This division is determined by some criteria, among which the most common are the following.
- Loan term. A distinction is made between short-term (up to 12 months), medium-term (12 to 36 months) and long-term loans (from 36 months). Short terms are used by various enterprises to replenish working capital. Short-term loans are used for individuals acquiring, for example, small household appliances and for current expenses. The loan in the long term is relevant for purchases of real estate, equipment, etc.
- Collateral. As a rule, money is given out under a certain type of collateral. It can be a loan secured by real estate, the guarantee of a third party. Special attention should be paid to the bank guarantee, which is an agreement on payment of funds in urgent need at the request of the borrower.
- Degree of risk. A distinction is made between standard (granted to holders of excellent reputation) and non-standard (high-risk) lending.
- Disbursement method. There are three subtypes here. Disposable loans (issued by creating a separate agreement), permanent (they can be obtained as needed within the existing limit) and guaranteed (issued by the appointed date).
- Repayment. It can be executed once, divided into several parts, at the request of the creditor. Payments can be made within a fixed period of time, can be made with delay of payment or can be prolonged.
- Interest rate. Can be fixed or floating (stipulated in the loan agreement).
How to get a bank loan
It’s not so hard to get a bank loan if you’re not a defaulter. Before signing the documents, please read their content carefully. Read everything, even if it is not interesting sometimes. It will take some time to process. By faithfully fulfilling all the options of the contract, you will create an excellent reputation, which may help you in the future. The activities of each financial institution are regulated by internal documentation, which indicates the principles of credit policy and the division of responsibilities between departments. It also sets out the rules for lending to legal entities and individuals. If you have problems with loan repayment, you can consider credit card debt relief programs.