Credit and Loan Types

Credit and Loan Types Personal Before you borrow money, it’s advisable to check your credit type and shop around for the loans available. How much interest you are charged depends largely on the credit and loan types, which is why they are crucial. The record of your past payments, the total credit available to you and how much you currently owe constitutes your credit history. Depending on whether you paid your past dues on time or defaulted on them, you would have either good or bad credit respectively. Most lenders would pull your credit history if you apply for a loan. It is a reasonable requirement because the lender is after all giving you money and has the right to assess the risks associated. There are websites that help you check your credit score. People with good credit easily get their loan applications approved because of their clean repayment record. Moreover they are charged low interest because the lender is confident of getting the money back. Banks and other high street lenders generally turn down loan requests from people with bad credit because they are bound by strict regulations that do not allow them to take high risks in the interest of their depositors. But there are plenty of alternative lenders now who specialize in giving loans to borrowers with bad credit. Some even accept loan applications from people who have gone bankrupt. Though there are lenders for bad credit, the interest they charge is quite a bit higher than what a borrower with good credit pays. This is because the risk involved in lending to a person with bad credit is higher. Another category is unproven credit. New businesses sometimes fall under this credit type. It can be a disadvantage because most lenders do not want to give money to a person or entity that doesn’t have a credit history. If at all money is lent to someone with unproven credit, the interest charged is steep. The type of loan taken also affects the interest rate. A secured loan comes with lower interest. This is because the loan is secured against an asset (collateral) – like property, securities or a cash deposit – that can be repossessed in case the borrower is unable to pay it off. An unsecured loan has higher interest rates. The reason is the absence of collateral, which translates into higher risk for the lender. How much money you borrow and how many months or years you plan to pay it back over also influence the interest levied. There are various kinds of loans available today. Among them are: o Personal Loans: Money for any purpose like making purchases, funding a vacation, education or house repair o Payday Loans: Quick cash to tide over the month till your paycheck arrives o Business Loans: To fund a new business or expand an existing one o Mortgage Loans: To buy property o Refinance Loans: To replace existing mortgage with a loan at lower interest o Home Equity Loans: Money given for any purpose against equity in your home o Debt Consolidation Loans: Paying off many debts through one loan at lower interest o Auto Loans: To buy a vehicle We at Abacus pride ourselves in putting hundreds of borrowers – including people with credit problems – in touch with lenient lenders who have approved their loan applications. After checking your credit type and determining what kind of loan you wish to take, visit www.badcreditpersonalloan.com to find the best deals.

Comments? Questions? Email Here

© HowtoAdvice.com

How to Advice .com