November 27, 2021

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Types of Loan Options for available for Business and Personal Needs

 

Money borrowers are normally given loans to be paid off in terms of short regular payments depending on the loan terms length. The loan term usually refers to the total amount of time allowable to them to refund the debt. People looking for personal or business loans have various options to put into consideration and decide which one best suits them. Loans have different terms and conditions, fees, repayment terms, and finance charges on their customers. Before borrowing a personal loan, a client should consider an installment loan vs term loan since they differ from each other and have different conditions for the borrower.

Personal loans are usually given to individuals who qualify and need additional money to meet their needs. There are various types of personal loans. Business loans are also different and require that a business fulfills certain requirements. Below are broad categories of loans available for business and personal needs.

Installment loans

Installment loans are personal, or business short term loans borrowed by most people for immediate financial needs including emergency costs. The repayment of installment loans is done within the agreed time and in small schedule payments several times. Unlike regular term loans installment loans are paid back in regular installments and not in a lump sum amount. They also have a longer payment period than the other term loans. 

Term loans

These are short-term loans offered to businesses for capital expenditure or the expansion of the venture. A person qualifies for this type of loan depending on the amount of money they are borrowing, the business’s regular cash flow and retained profits, and the borrower’s repayment capacity. This type of loan can be classified into three broad categories i.e., short term, long term, and intermediate term depending on how the interests are charged and the time given to the borrower to repay the loan. The specific amount of money borrowed should be refunded within the loan schedule. 

Loans given to people are not equal and similar. A borrower should compare and settle on the best type of loan for them to borrow that will best suit their situation. An individual’s credit factor is important since it determines the loan interest rates, the approval for the loan, and loan terms applied. The biggest difference between installment loans and term loans is the amount of money a borrower can be given. Installment loans are usually in higher amounts and have a longer repayment plan compared to term loans. 

Conclusion

There are several options for borrowers to explore depending on the type of loan they need and their situation. The loans usually have different schedules of repayment, terms and conditions, and interest rates. The rates are also applied differently for installment loans and term loans. These types of loans further have sub-categories that also have various terms and rates depending on the length of time the borrower can schedule for loan repayment. Finally, these loans usually have different conditions under which one qualifies to be lent.