Get Knowledgeable About Some Common Types Of Personal Loans

There are different types of consumer and business loans which are categorized according the purpose of borrowing. You may borrow the money for the purchase of a real estate, production equipment, transportation vehicle, consumer durables, raw materials and much more. You can now have student loans, personal loans and various other types of loans. There are a plethora of sources of funding such kind of loans namely banks, credit societies and unions, financial institutions and companies, leasing and insurance companies, trade credit and much more. You can also borrow from private sources like your friends and relatives even apart from a number of government sponsored loan programs.
Short Term Loans
Short term loans are those which are taken for a special and single purpose having a maturity of one year or less. The primary purpose of such loans is to cover any shortage of cash which may arise from a one time increase in current asset as for example a purchase of a special inventory. It may also arise due to the need to make an interim payment or financing, unexpected increase in the payable accounts and much more. There is a specific kind of short term loan known as Trade credit which is usually availed by the business people. These loans are supposed to be cleared within three months from the date of borrowing.
Line Of Credit
Another type of loan is known as Line of credit which is for less than a year and used for financing the purchase of inventory or the materials for production. When you sale the inventory successfully it repays the LOC automatically. If you have a working capital loan permanently it would provide your business with the money you require for a period of one to five years when your cash flow from the business seems not enough to sustain. These loan types are very common in seasonal business where goods are manufactured and sold for one season.
Intermediate Term Loans
It is a specific type of term loan which have a loan maturity period or tenure which is more than the short term loans and less than the long term loans and therefore are called intermediate term loans. These types of loans are used for the purchase of specific items like furniture, vehicles, fixture, plants, office equipment, raw materials, parts and much more. You have to retire the loan within a period of one to five years along with the interest. You can also take analogous intermediate term loans as for example auto loan, loan for a boat, home repairs and renovation and others.
Long Term Loans
These are the most common type of mortgage loans which are term loans which are secured by the asset which you purchase. The maturity of such mortgage loans can be anything between ten to thirty or even forty years even. All the details of the loan including dates, amount, rate of interest, rights and obligations and all are mentioned in the indenture which is a legal bond. You may come to know more about the procedures and requirement to take a mortgage loan if you visit here and also about other loans.

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