DIFFERENT TYPES OF CREDIT

Credit refers to the concept of a lender providing a loan for a borrower. There are various different types of credit, such as credit cards, overdraft facilities, higher purchase agreements and personal loans, depending on how the borrower intends on repaying the finance, according to http://www.aquacard.co.uk.

Credit cards

Credit cards are a type of credit that allow users to borrow money from a bank or credit card issuing company to purchase goods and services or to withdraw cash. There are countless credit card types, and various forms of charge cards, store cards, rewards cards and balance transfer cards available.

Bank loans

Other types of credit include loans, which can be paid off in monthly instalments over a particular period. Mortgages are a type of credit often used to purchase property. They are secured against a property and are usually paid off in monthly payments over an extended period of time.

Overdrafts

Overdraft facilities are another type of credit that, because of a pre-arranged agreement authorised by your bank, allow you to withdraw money after the bank account balance reaches zero. An overdraft has a limit depending on your account history and needs. They are helpful in providing a safety net to cover short-term arrears and to compensate for a temporary lack of cashflow. Be aware that overdrafts incur interest and, depending on your agreement, may include an administration fee or monthly payment charges.

Higher purchase and personal loans

Other types of credit include a higher purchase agreement, which is a mechanism for borrowing money in order to purchase goods. Once the purchase is paid off, you then rightly own it; but if you don’t make regular payments, creditors can ask you to return the goods. Personal loans allow you to borrow an agreed amount and pay it back with interest over a fixed period of time.

Getting personal loans from your bank

You may want to start a home business, or you may want to borrow for a vacation, or you may have some other use for the money. Whatever the reason is, getting a personal loan can give you the money you need. A personal loan, usually unsecured, can provide you with a little extra cash to help you meet your goals, according to http://www.goodfinancialcents.com.

Actually securing that personal loan can be a bit difficult though. Many people find the process scary, and they don’t know where to begin.

Hereare few ways on how to get your personal loan approved:

*Before you start you loan process, make sure you understand how personal loans work. First of all, there are two main types of personal loans, secured and unsecured.

A secured loan will usually give you lower interest rates, but you have to put something up as collateral for the loan, which means that if you don’t pay back the loan, they take your collateral.

Unsecured loans, as you can guess, don’t require any collateral, but will have higher interest rates.

*The other basic thing to know about personal loans is what you will need to get one. The information you will need will vary depending on which technique you use to get the loan.

*You will also need your employment information like your work history and pay stubs to verify your income.

“You will need to provide other sources of income like alimony.

*Depending on the loan type and loan amount, the lender may ask for other information and documents.

*However, the interest rate on a personal loan at a bank that values you as a customer is usually quite low compared to the alternatives.