In a crowded market, it is easy to be confused by the finance products seemingly available to you. We thought it may be helpful to explain what a lot of these products are. We take a look at different types of loans.
Identical Loans With Different Names
The fact is that many loans are essentially the same product. They simply market them to cater to different demographics. So all loans are essentially the same thing. They involve a lender providing funds to a borrower. The borrower then repays the money, plus interest, over an agreed period of time. This is essentially the same process whatever your loan is called. And whatever you intend to use it for. The mechanics of the deal can still vary however.
Different Types Of Loans – Same product
Let’s look at some of the names given to the same product. Payday loans, short-term loans, personal loans, flexible loans, cash loans, consolidation loans and more. These could all in theory be the same product. A payday loan stands alone as it will refer to a loan that requires a single repayment, usually. But it is by definition also a short-term loan. And a personal loan, unsecured as per all the others above. And it is flexible usually and so on. You get the idea. Let’s look at a few other types of loans.
Different Types Of Loans – Guarantor Loan
A guarantor loan is a handy product for those that struggle to obtain finance due to a mixed credit history. This allows a friend or family member to act as a guarantor. They are liable for any debt that is not repaid on time. This relies a lot on trust.
Different Types Of Loans – Unsecured & Secured Loans
All this means is the distinction between whether a loan has an asset tied to it as collateral. So most short-term loans are unsecured. There is no threat to your assets should you struggle to make repayments. A mortgage is secured against the biggest asset of all – your home. You could thus lose that asset if you do not make your mortgage payments.
Consolidation Loans
These are loans that you take out to consolidate various other debts into one handy monthly payment. Loans do not have to have this name for you to use them for this purpose. As we have shown, loans can have a number of names, according to your intentions. You could easily call a loan a home improvement loan if you need money to make adjustments to your property.
Personal Loans
All the products we broker are personal. This is simply a distinction between personal and business loans. These loans are for individuals, hence the personal element in the name. Other names used are cash loans and flexible loans. Most loans nowadays are flexible. They are tailored around your circumstances.
