Loans: what types exist and what are their characteristics

Personal or mortgage loans, requested with or without a guarantee, etc. It is necessary to know their aspects before requesting them

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A bank loan is an operation through which the financial institution makes available to the customer a certain amount of money, stipulated previously, through a contract with which said customer acquires the obligation to return the money within a limited time. Usually, the amount of money lent by the bank is added interest that must also be returned, and that will vary depending on the type of loan requested.

A bank loan, therefore, is a commitment that should not be taken lightly and that in order to obtain the best profitability requires prior knowledge of its characteristics. Knowing what types of loans exist is fundamental to be able to request from our financial institution the one that best suits our needs.

What elements form a loan? Types of loans

Types of loans

Although there are different types of loans, in reality, all can be included within two large categories known as personal loans and mortgage loans- same Payday Now loans.

Personal loans are those designed to finance the specific needs of the client at a given time. As a general rule, the principal or economic amount requested in this type of loan is small. Within the personal loans are, for example, the so-called consumer loans and student loans. The consumption ones are used to finance durable consumer goods such as a car, for example. While the studies, as the name suggests, are designed to cover the costs of the enrollment of degrees, postgraduate and even university trips such as Erasmus.

In the loan simulator of the BBVA website, you can see the types of personal loans offered by the bank and check their conditions based on the amount of money you want to request. BBVA offers up to ten different types of this group of loans: a clear example of how varied they can be.

Mortgage loans, on the other hand, are those used to finance the purchase of a home and, sometimes, the start-up of a business. In addition to involving amounts of money higher than those of personal loans, mortgage loans have a real guarantee for the bank. That is, if the client does not return the loan money, the bank can have the mortgaged property sold to recover the debt, and can also become the owner of the financed home.

In addition to the two types mentioned, the loans also differ according to whether they have an endorsement or not. Having a guarantee at the time of requesting a loan is a way of guaranteeing the fulfillment of the acquired economic obligations. The guarantor is willing to meet the guarantor’s commitments, that is, to pay the loaned capital plus the interest in case the borrower can not. Now, to be a guarantor you have to fulfill a series of characteristics, among others: