Different Types of Loans

Different types of loans

If you’re looking to take a loan but you’re not sure what type of loan to choose, it’s always helpful to know the features and benefits of each type. If you apply for a loan at a bank, a consultant can explain the different options to you so that you know what’s to apply for.

Personal Loans

The person alone is alone that you take out from a bank to use for almost anything you need. This can be home renovations, medical expenses, or even a holiday. If you have a good credit record and you are permanently employed, you may qualify for a personal loan and the amount you qualify will depend on your specific financial position. These loans can usually be repaid over a longer period of up to 60 months.

Consolidation Loans

Consolidation loans are used to pay off all your creditors, so that you just have one loan to repay at the end of every month. This means that you have one lower instalment to repair the bank, as opposed to multiple instalments for your creditors. If you are already struggling to pay your debt it’s not recommended to take out a consolidation loan, however this is the perfect option for people who would simply like to reduce their monthly repayments so they can have more money available.

Short-Term Loans

Short-term loans are offered by banks and other credit providers on a short-term basis. This means that you can either apply for a payday loan, where you will be granted credit which you need to repay in full on your next salary day. Short-term loans are usually repaid over 1 to 6 months and they are for shorter amounts, usually under R10,000.

Leave a Reply