Financial education not only helps us make better decisions when hiring, but also when planning for the future. In this article, we make a small, and of course not complete, list of types of loans that exist and are available to most consumers.
Mortgage loans
These loans are well known because without them few could afford to buy a home. The loan is associated with a mortgage guarantee, which generally refers to the same property that is going to be purchased.
Although contracts may have many particularities, the general idea is that if a default occurs, the lender will have the right to keep the ownership of the home.
Immediate response loans
These are small consumer loans in which the main characteristic is urgency. At LoanScouter, a financial comparator with portals in Nordic countries such as capitalo.dk in Denmark, you can see different loans of this type. The interest rates are high in exchange for the consumer not having to do paperwork and being able to have an acceptance or rejection response to the request in minutes.
If they are not paid, a very high interest rate is usually applied, which sometimes reaches 1% per day. Fortunately, regulation limits the maximum amount that can be charged as interest. On the other hand, they offer a lot of flexibility and can be very useful for emergencies.
Loans for renovations
These loans have the peculiarity that in order to receive the money, the lender may require the presentation of a proforma invoice from the construction company. This is done because the lender understands that doing a renovation will revalue the property, so that the client will be more solvent than they were at the beginning.
Default will generate default interest and many other complications depending on the contract. In principle, they do not have to be linked to a client's asset guarantee, although everything will depend on what is negotiated.
Loans for the car
As its name suggests, the money should be used to finance the purchase of a vehicle that can be new or second-hand. In general, with a little research it is likely to find this type of loan in an entity with a lower interest rate than the one offered by the dealer itself.
It is relatively common to use the car that is purchased as a guarantee for this loan, so if a default occurs, the vehicle could be lost in favor of the lender.
Loans for studies
Since studies are considered something productive that will probably provide a higher future income to the student, lenders are willing to grant loans for this with reduced interest rates. These loans are very common in the United Kingdom and the United States. In Spain they are not so common, but their popularity is increasing. The idea is to repay the loan after finishing studies with the relatively higher salary that will be obtained thanks to the training. A theory that with the youth unemployment in our country, is held with tweezers.
