There may be a lot of moneylenders in your area, but are they all licensed and reliable? You must be careful when dealing with moneylenders because some are unlicensed and can take advantage of you. If you have a plan or are planning to take out a loan, it would be best to research licensed moneylenders like QV Credit, which is known to have served thousands of individuals in Singapore.
Besides knowing if your moneylender is licensed or not, it’s also better to know your loan options. This article will go over the different types of loans offered by money lenders and how each one works.
The Different Kinds of Loans
There are various types of loans that money lenders offer their clients. Some common ones include personal loans, payday loans, title loans, and student loan consolidation. Here are the different kinds of loans:
Personal Loans
A personal loan is a common form of unsecured personal borrowing, which means that it does not require any collateral. With this kind of loan, you can borrow money from your lender to finance major expenses like home renovations or medical bills.
The amount for the loan will depend on various factors such as credit history and income status. Most lenders offer loans up to $35,000 with payback schedules lasting between 12 months to 60 months (or more). Personal loans commonly have higher interest rates than other types of loans because they’re considered “unsecured”.
Mortgage Loans
A mortgage or house loan is a form of secured personal borrowing in which the borrower pledges his property as collateral. To make it simple, if you default on your payments, then your lender can take ownership of your home and sell it to get back their money for lending you the funds initially.
As with personal loans, the amount that’s available to borrow will depend on various factors like income status and credit history. Mortgage loans have lower interest rates compared to unsecured ones because there’s some form of “security” when someone takes out this kind of loan (e.g., an asset).
Home Equity Loans
A home equity loan is a type of secured borrowing in which the borrower borrows money against his home’s value. This form of loan can be utilised to pay for education, credit card debt consolidation and renovation expenses, among others.
It works much like mortgages, where you have to make monthly payments until your balance is paid off at some point. The IR or interest rate on this kind of loan will depend primarily on your lender, but factors such as income level, outstanding balances and other financial commitments also affect it.
Debt Consolidation Loans
A debt consolidation loan is another common form of secured borrowing in which you combine all your debt into one single repayment. The idea behind this kind of loan is to repay what you owe faster and at lower interest rates compared to the original ones you have with each creditor.
However, you mustn’t borrow money from a lender if there are other options available for consolidating your existing debts. Debt consolidation loans usually come with higher interest rates because they’re considered “secured”.
Student Loans
A student loan is a type of borrowing that helps students finance their higher education. Student loans can be utilised to cover or support tuition fees, living expenses like housing or food costs, transportation costs (e.g., bus fares) and books or other supplies needed by students in school. The IR or interest rate on this kind of loan will depend primarily on your lender, but factors such as income level also affect it when you’re applying for one.
Payday Loans
A payday loan is a common form of unsecured personal borrowing in which you receive money on your next payday with the agreement that you’ll repay the full amount within two weeks. It’s also called a “cash advance” because it allows you to get cash quickly when you need it most.
A payday lender will charge an interest rate for lending out this kind of short-term loan, and there are fees associated with applying, receiving and repaying one too. However, they’re very flexible, so if no other options work for your situation, consider getting one from a reputable company instead of using high-interest sources such as pawnshops or online lenders. That’s because they offer quick loans, SMS texts, or emails without considering your situation.
Business Loans
A business loan is a common form of borrowing that’s used to finance the operations of your business. Various kinds of loans are available for businesses, such as traditional, supplier and factoring financing, among others.
Car Loans
A car loan is a type of borrowing that allows you to finance the purchase or lease for your new car. You can get an auto loan from a bank, an online lender and a credit union, among others.
The interest rate on this kind of personal loan will depend primarily on your credit score (CS) as well as other factors like debt-to-income ratio, outstanding balances and monthly income, according to major financial institutions.
Title Loans
A title loan is a type of unsecured borrowing in which you use your car as collateral. It’s also known as “pawning” or “title pawn”.
Therefore, when taking out this kind of short-term loan from a lender, it works like most other personal loans where you borrow money and have to pay it back with interest over time until the full balance is paid off at some point. However, suppose for any reason you can’t make payments on one. In that case, they’ll repossess your vehicle, so proceed cautiously with them before agreeing to anything else that involves lending money, such as refinancing an existing auto loan elsewhere first or even selling your car privately yourself!
Credit-builder Loans
A credit-builder loan is a type of unsecured borrowing that works for people who are trying to build or rebuild their credit. These forms of loans can help you establish your credit history as well as improve it if you have any dark marks on your report with time too at no extra cost over the course of repaying this kind of personal loan in instalments.
