Quick Answer: What Are The Different Types Of Loans?

How many types of loans are there?

The most common consumer loans come in the form of installment loans.

These types of loans are dispensed by a lender in one lump sum, and then paid back over time in what are usually monthly payments.

The most popular consumer installment loan products are mortgages, student loans, auto loans and personal loans..

What is loan and its types?

A loan is when you receive money from a friend, bank or financial institution in exchange for future repayment of the principal and interest. They can be unsecured, like a personal loan or cash advance loan, or they may be secured, like a mortgage or home equity line.

What is a simple loan?

A simple interest loan is one in which the interest has been calculated by multiplying the principal (P) times the rate (r) times the number of time periods (t).

What are different types of loans offered by banks?

Personal Loans: Most banks offer personal loans to their customers and the money can be used for any expense like paying a bill or purchasing a new television. … Credit Card Loans: … Home Loans: … Car Loans: … Two-Wheeler Loans: … Small Business Loans: … Payday Loans: … Cash Advances:More items…

What are the 5 types of loans?

A Simple Guide to 5 Popular Types of LoansAuto loans. Most people need to borrow money to buy a new or used car, which can take years to pay off. … Personal loans. Banks offer personal loans that are unsecured — this means collateral isn’t needed, only a borrower’s creditworthiness. … Credit cards. … Cash advances. … Small business loan.

Which type of loan is best?

Best for lower interest rates Secured personal loans often come with lower interest rates than unsecured personal loans. That’s because the lender may consider a secured loan to be less risky — there’s an asset backing up your loan.

What are the 2 types of loans?

There are two main types: federal student loans and private student loans. Federally funded loans are better, as they typically come with lower interest rates and more borrower-friendly repayment terms.

What is loan example?

For individuals, loans can be personal loans, mortgages or lines of credit. You can use a loan calculator to see how much your monthly payments would be on any type of loan, including mortgage loans and car loans. In the business world, bank loans and corporate or government bonds are the most common.

What type of loan is a car loan?

Car Loan. A car loan is secured against the vehicle you intend to purchase, which means the vehicle serves as collateral for the loan. If you default on your repayments, the lender can seize the auto. The loan is paid off in fixed installments throughout the loan.