When the topic of loans is brought up, one of the first words that often pops into one’s mind is: Banks. There is nothing wrong with this as banks are one of the (if not the most) traditional institutions that people run to when they are in need of some extra money.
“What is a bank loan?”
It’s pretty much self-explanatory. In a nutshell, bank loans are loans that… you get from a bank. Despite seeming very straightforward, there are still many things that one must know when it comes to this; things that should always be up for consideration.
I. Eenie Meenie Miney Mo, All the Types You Need to Know
There are various types of loans that you can apply for in banks. Ranging from house loans, auto loans, or even extra funding for your budding small-to-medium enterprise, they offer a wide array of options to choose from, depending on what you need.
II. Collaterals or No Collaterals, That is the Question
When it comes to applications, banks are known for their systematic and careful processes. While this safeguards the quality of borrowers and protects the company itself, it also tends to stretch the time needed to process your loan. Aside from the duration, some requirements might be a bit tricky to deal with – like collaterals.
Bank loans branches out into two: Secured and unsecured. An unsecured loan is pretty simple. You just need to submit and meet their standard requirements and documentation, and then you’re good to go!
However, when it comes to secured loans, you will be required to present collaterals or personal assets which the bank has the authority to claim in such case that you are not able to pay your due.
III. Interesting Interests and Rates
Another word that often comes to mind when talking about loans? Interest.
When it comes to payment and interest schemes, there are two possible rates: Fixed rates and variable rates.
As its name suggests, fixed rates mean you have a certain amount of interest that you have to consistently pay throughout the duration of your loan. On the contrary, variable rates mean that your interest per month may fluctuate and change depending on the market.
Bank loans are certainly not for everyone. It may seem like a weird thing to discuss but it’s always good to have backup plans especially if you feel like banks are too business-y. You always have the choice to look for alternatives like other financial institutions that can help you out; institutions such as Cashwagon, a money lending company that offers instant cash loan!