The loan is an activity that human beings have been doing since ancient times, even before the appearance of what we now know as money. With the passing of time, the way of obtaining loans has changed, especially with the emergence of technology, from there comes what we currently know as quick loans, being these loans, not a way to lose money, but rather a form of aid financial when they are put to good use.
Online loans have been imposed as a very important form of financing for our generation
This is due to the technological evolution we have had in recent years. People who usually use this type of money loan, are mostly young people belonging to the millennial generation, whose ages range between 20 and 35 years, considered as digital natives.
Loans are increasingly present on the internet at this time where time flies by. People seek ease when solving their problems, especially in financial matters, so they look for ways to solve these difficulties through their mobile devices and that’s where fast loans are so attractive. This type of financial tool allows customers to save the presentation of unnecessary documents or have to answer long surveys, since they are loans without an endorsement.
Knowing this, today we will present the different loan options that currently exist:
Personal loans are a contract issued by a bank with which a financial amount is advanced to a person called borrower with the aim that this person who receives the money can return the amount borrowed in addition to previously defined interests.
Sometimes people often confuse the concepts of loans and credits, so it is important to know that they are two different concepts. Credits, unlike loans, imply that a limit is granted on the money requested, that is, the person does not ask for the amount he needs, that amount is defined by the banking entity that grants it.
It is important to know the necessary guarantees, usually personal loans do not ask for special guarantees more than the present and future assets of the people. What does this mean? That unlike other types of money loans, personal loans have guarantees established by the entity that grants them, therefore, in case the borrower fails to pay, it offers as collateral all present and future personal assets that it owns, regardless of the amount.
By having these guarantees, personal loans can be a risk when people do not know how to use them , since they often have higher interest rates, in addition to having less time to make their payments. However, those people who have good financial fluidity in the same bank that issues loans, are more likely to obtain loans with better conditions.
The requirements of the personal loans are defined by the one that issues the loan, which performs a financial evaluation of the people who require it to assess their ability to pay. It is a similar process to make a personal budget, where the monthly income of the person is evaluated and the way in which he has assumed other financial commitments, thus analyzing the payment terms of the person and in turn a valuation of the goods is elaborated. They serve as guarantees.
An important element in these loans is that the time of a personal loan is usually not longer than the time of the element that is being financed, so payments must be correctly defined and the loan will be short, medium or long term. . Many people consider this factor complicated to define, but it is important to take it into account, because if the payment term is longer, the lower the amount that must be paid monthly, but in the end it will end up paying more than expected because the interest rates they are progressively increased, that is why it is best to avoid personal loans that charge high payments for advance payments and previously define the fees that are within your possibilities to pay.
Among personal loans, it is important to know that there are various types that, as mentioned above, are defined by payment terms, however they are also defined according to who is granted, so in addition to personal loans, we have:
Loans for consumption
These loans are destined to durable goods, both material and immaterial, such as automobiles, furniture, appliances, travel, etc. One of the disadvantages of these loans is that interest rates are higher than market conditions, so it is best to quickly meet the payment terms, thus taking care of the debt, as this is one of the loans that most they cause over indebtedness in the clients.
They are not so common in some countries, but they are intended to finance school and higher education enrollments. These types of loans usually have lower interest rates than personal loans.
The people who request these loans put as guarantee of payment the real estate itself, which becomes part of the entity that makes the loan in case of default of payment by the borrower. The interest rates on these loans can be fixed, variable or mixed, all this depends on who makes the loan. They are fixed when the interest rate is maintained throughout the payment process, are variable when interest rates vary according to the conditions in which the market is located and are mixed when an initial period of fixed interest is established and when that period a mixed interest is established to make the payment.
Loans for SMEs
The loans of money for companies are one of the alternatives to receive financing for the production, start of projects or make expansions. However, due to the difficulty of these loans, in our time the companies have looked for other alternatives that allow financing that is not only the loans made by the banks, it is there where the crowdfunding appears , which is a new model that Unlike loans, it deals with the collaborative support of companies to carry out projects together. This model arises in response to the crises of small and medium enterprises to obtain financing.
Loans granted to companies are defined according to the term, short-term loans are aimed at those companies that need money for production and have a flow of capital in and out. Medium and long-term loans are aimed at new companies and need capital to operate, normally this loan is used for machinery or tangible assets.
The way to borrow has changed exponentially. Currently technology and the Internet have had a great impact on financial platforms, the fall of traditional loans has given rise to a variety of online platforms in order to make quick loans and small amounts but in a simple way. Previously getting money loans was relatively easy, however, over time banks have become increasingly selective with their customers, which has made the request for bank loans not comfortable. In response to this, online loans have become an alternative that has become a very popular channel, since it solves a large part of the problems presented by banks when making these types of requests.
Online loans have many advantages, among them is the speed of the process, since with just filling some identification data you can make the request, having your credit or loan in less than 5 min. Mobile technology has been a differential factor in this area, since it is possible to request a loan online from your home or from any place where you have an Internet connection.
The limitation of these quick loans is that only small amounts can be ordered, however, this is not such a serious problem, since a large part of the amounts granted are sufficient to cover the common needs that people require.
In short, online loans are loans without collateral and are delivered immediately upon request to cover a specific need.
Fast cash payments are intended to make sudden or unexpected payments, such as fixing the car breakdown, a medical emergency, the payment of public services, etc. These loans have accessible interest rates, this means that if the person requires a few months to pay, the interest rate will not be exaggerated, because as we mentioned at the beginning of this paragraph, this type of loan has the privilege of Get cash quickly to realize the expenses.
Credit cards are an instrument granted by banking entities for their clients to carry out transactions with which they have the privilege of using an amount lent by the bank. Being a credit card, the amount of utility that customers can have is not defined by the same customer, but by the bank, which is progressively increasing.
Credit cards are short-term financing. Normally your payments must be made in a period of approximately 30 days, although these terms vary according to the financial entity. Some of these cards contain extra benefits such as travel insurance, shopping bonuses, among others.
These were some types of loans that we can make, it is necessary to know well their distinctions, since each one varies in elements such as: requirements, guarantees, interest rates and payment terms.
To finish, we want to give you some tips that you should keep in mind before applying for a loan:
Do not ask for more than the necessary amount, as we mentioned in the previous paragraphs, when you ask for a loan of money, you will have to return it together with interest and commissions, which means that the amount borrowed is greater than the amount paid. For this reason, it is best to adjust as much as possible the amount you want to request in order to pay less interest.
Observe the annual equivalent rate (APR), when you apply for loans, you not only have to look at the guarantees and interests, you must also pay attention to the extra products offered as insurance and special bonds, so when you make the request, remember to check well the APR, which is the total cost of the requested loan where the commissions, expenses and interests are included.
Take care of the phrase “fast money”, it is very popular to see ads for online loans or quick loans that guarantee infinity of fast and safe benefits but in the end do not have any kind of guarantee. We must be very careful with these loans, verifying that they are within our possibilities of payment.
These were some tips that we must take into account when requesting any type of loan. People tend to sell loans as something bad and that can lead to debt and the financial crisis, however, this belief is a little extreme because all loans are defined by the use that is given. This means that both the person who receives a loan to finance their company or a personal asset and the entity that issues the loan, obtain a benefit from this, for which we can say that it is a healthy way of financing. The problem arises when the one who requests the money does not have the capacity to return it, so if we use the loans strategically, we will see good results, not of loss, but of investment.