A loan is an amount, property or goods given by the lender to the receiver to be repayable by way of principal and interest over a short or long period. The amount of the interest received by the lender is the profit for him for which he does this service. There are various ways by which a loan can be got. The moneylender may be in the form of an individual or bank or financial institution that does this for the consideration called interest. The interest factor for the loan will vary from lender to lender. Higher the risk the more may be the rate of interest. Lenders however do not have any share in the business of the person taking the loan. Generally financial institutions and individuals lending money may lend it for a higher rate of interest varying from approx 10.75 Percent to 25 Percent. Banks also give loans but this is normally after mortgaging of the item for which the loan is given. So here if the individual wants to buy a car or a house he has to mortgage the same to the lender for the period for which the loan continues. The receiver of the loan will, in turn, pay an EMI per month to the bank which is the amount of a part of the principal and the interest factor. The negative factor here is that if you have a poor credit scoring it may be difficult to get loans from banks.
Credit unions are becoming more popular, they are flexible and charge a lesser rate of interest compared to banks. They give a personal touch. However here there may be a limit to the product or services these credit unions offer and may not be able to pay back online or see your payoff progress. Online fast money lenders are an alternative when you have poor credit scoring. These are also called urgent cash money lender. Here there is no approval needed and not much personal information needs to be given. However, the rates of interest may be as high as 400 % and one may find the fees and costs just being piled up and not easy to break even. Cash Advances using the Credit card in the ATM which you may get in seconds but the interest rate may be higher than the purchase rate thus making the whole thing expensive. When you are in some desperate situation for funds you have pay lenders who may offer loans for an average of 2 weeks at an exorbitant rate of interest. It may be interesting to note that you may be in a position to take a loan from our retirement savings which are normally half the saving amount. Though a good alternative it’s not advisable as you can’t benefit from the compound growth. There are basically short term loans,long term loans, lines of credit or alternative financing, Nationalized bank, credit unions, private money lenders payday lenders, etc are all there to provide loans.