Understanding the Different Types of Loans You Can Avail

No matter how meticulous we are with our finances, there comes a time in everyone’s life when they find themselves in need of some extra cash. Right from planned expenses such as wedding and home upgrades, to unforeseen expenses such as medical emergencies, every such event requires a significant amount of money, for which people often turn to loans. If you too are thinking about taking out a loan, you can always count on a trusted money loan app such as KreditBee, but at the same time, it is important to know about the various types of loans you can take and the differences between them. That is exactly what we will discuss in this blog post. Read on.

Common Types of Loans:

User Convenience

A personal loan, just like a credit card, does not involve any kind of collateral. That means you don’t have to provide any kind of security to obtain a loan. There is, however, a catch. Firstly, to qualify for a personal loan, you should have a seamless credit history; if you have made a credit settlement with a lender in the past or have a longstanding financial liability, your loan application may not be approved. Secondly, personal loans are known to have higher interest rates than other types of loans, especially the ones involving collateral.

Auto Loans

Auto loans are probably the most common type of collateralized loans available out there. Though the eligibility criteria for auto loans are not as stringent as they usually are for personal loans, they present a different set of concerns for borrowers. Firstly, when you take an auto loan, the vehicle bought using the money stays in the name of the lending body until the loan amount is paid in full with interest. Secondly, auto loans are generally approved to cover a “partial value” of the vehicle, which means the borrower has to arrange the down payment, which can be a problem for many people.

Education Loans

Who doesn’t dream of getting a world-class education and being the best they can be? The problem, however, is often the steep fees charged by educational institutes. That’s when education loans come to the rescue. There are, however, a couple of things you should know - one, all banks offering education loans have a list of pre-approved institutes for which they approve loans. If the institute you have chosen doesn’t belong on the list, the loan application will most likely be turned down. Secondly, these loans require significant paperwork, and due to a large number of applications, they usually have a prolonged processing time.

Business Loans

Business loans are probably the toughest to obtain as they require extensive paperwork and a comprehensive business plan that elaborates on how the borrower plans to use the funds and how he would repay the loan amount. The entire process typically takes weeks, if not months. Another concern with business loans is that they often involve significant collateral, that the borrower may not have the financial means to provide. As a result, a lot of business ideas are unable to get off the ground due to a lack of funding.

Home Loans

Home loans are another common type of collateralized loans that are offered to borrowers looking to buy or build a house. Besides having numerous qualification requirements, home loans also hold the purchased properties as collateral until the outstanding amount is paid in full. This means that if during the tenure of the loan, the borrower is unable to make the due payments, the lending body will have the right to enforce a foreclosure. In other words, one risks the chance of losing their property if they fail to pay the installments on time.

What's the Solution?

In the light of all that we have discussed so far, it would be safe to say that all types of conventional loans have their downsides. That leaves us with a very important question: what do you do when there is a need for money? Of course, most people, particularly those who don’t want to burden others or jeopardize their reputation, don’t turn to their friends and family for help. Bank loans, on the other hand, have their downsides. So, what does one do? The answer is getting a quick loan through a trusted mobile loan app such as KreditBee.

Why Choose an Instant Personal Loan?

The short answer - it doesn’t have any of the shortcomings of traditional bank loans. The long answer - obtaining an instant personal loan through a personal loan app such as KreditBee is super simple, does not involve any collateral, and is extremely quick. All you need to do is download the app, create your profile by providing some basic information, and then upload the required documents. Once your profile is verified and approved, you will be able to get a loan in as little as 10 minutes! And the best part - the amount is directly transferred to your bank account almost instantly upon approval. So, no more waiting for the fund transfer even after loan approval!

The Last Word

“Tough times don’t last, but tough people do” is a popular saying. To that, we say, more than tough, smart people last longer! If you need immediate cash, look no further than the best personal loan app - KreditBee. Download our app through the Google Play store and say goodbye to your financial worries. If you have any questions or would like to know more about our instant personal loans, simply call 080-44292200 or fill out our contact form. You can also email us at [email protected] and we’ll take it from there.