Taking a loan is the process of borrowing money from a bank or borrowing money from a private lender by paying a certain rate of interest with every installment that you pay. The concept of taking loans has been going on for centuries now and after all these years, there are some innovations and classifications that make it easier for you to take a loan from somewhere. Wherever you take a loan from, every lender has a certain criteria that the candidate needs to fulfil before borrowing money.
The reason for this is just to assure that nothing wrong will be done with the lender’s money and that they will receive a full payment in return. Coming back to the classifications under loans, over these years, a lot of new classifications have come in just so it gets easier for the lender and the borrower too. These classifications are on the basis of many different factors such as, purpose of borrowing, security provided and many others that are listed below:
- Secured Loans
- Home Loan
- Loan Against Property (LAP)
- Loans against policies
- Gold loans
- Loans against mutual funds and shares
- Loans against fixed deposits
- Unsecured Loans
- Personal Loan
- Short-term business loans
- Flexi Loans
- Education Loans
- Vehicle Loans
These are some of the types of loans that are available at banks. Every bank or lender has a different criteria and/or qualifications that the borrower needs to fulfil.
Ten Golden Rules For Loans:
These few golden rules are tips that every borrower needs to keep in mind before taking a loan.
- Make sure you understand the different types of loans before you go ahead to ask for one. Decide your purpose behind taking a loan and see which type of loan would be best for you. You could also go to a bank and ask them to explain it to you. This is important to understand so that you can get the right loan for yourself and enough time to pay it back.
- Check out for all the different lenders first before sticking to one. Just how it is important for the lender to give a loan to the right borrower, it’s important for the borrower to find the best lender too. Try your best to find one with the low interest short term loans loan rate so that you have less dues to pay.
- Be realistic and borrow only how much you need.
- Keeping the tenure shorter will benefit you.
- Make sure you pay your dues on time.
- Borrow money only for necessary reasons such as buying a shelter, starting a business, education, etc. Do not take a loan for investment or saving purposes.
- Understand all the loan documents or any contract well enough before agreeing to them.
- Do not have a lot of loans going on at the same time.
- Make sure your retirement plan is in place before you start taking loans for your child’s education.
- Make sure your family knows about your debts at all times.
Loans are something to be taken seriously and done well. Make sure you’ve done all of these before taking a loan.