What are loans for individuals: types, forms, the most profitable options

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The popularity of bank lending to individuals is growing every year. Financial institutions offer their customers all new products that are designed to meet the financial needs of borrowers. Often, even the fact of overpayment of interest does not stop an individual from obtaining a loan.

A citizen makes such a deal with a credit institution when his own funds do not allow him to achieve the desired goal. For example, buy an apartment or make repairs, in case of unforeseen circumstances. Banks offer various lending programs. The client only has to choose the intended purpose, conditions and provide the necessary documents for registration. What loans are in banks, we will analyze in this article.

Relevance of modern loans

Banks willingly issue loans to individuals, but under different credit conditions. Of course, you can save up the necessary amount on your own, but this will take a very long time. Yes, and inflation can devalue the accumulated amount. Therefore, most individualschoose the most convenient option to meet financial needs - a loan.

Types of loans for individuals by terms

A loan agreement between the bank and the borrower can be concluded for a different time period. Depending on this, the following types of loans are distinguished:

1. Short-term, as a rule, the repayment period of such a loan does not exceed one year.
2. Mid-term - from one to 5 years.
3. Long-term loans are provided for a long time up to 30 years (for example, a mortgage loan).

Shape and currency

Considering the question of what loans are, it is worth noting that they are:

• cash;
• cashless.

In any currency:

• rubles;
• euro;
• dollars.

Recently, loans are issued, either in kind or in the form of a credit card. And if banks most often issue cash within the framework of targeted programs, then almost any citizen can receive cards with a certain limit for various needs.

Purpose

what are loans? The largest group is the intended purpose. The most popular include:

1. Consumer - for various purposes.
2. Car loan - for the purchase of a new or used car.
3. Mortgage - for the purchase of housing.
4. Educational - to receive a higher professionaleducation or advanced training.
5. Overdraft is a loan in which funds are transferred by the bank to a plastic card with interest reimbursement and for a short period.
6. Trust loan - small amounts for a short period and one document.
7. Debt loan for urgent purposes.

Consumer credit

Most often, the money in the bank under this program is taken for repairs or the purchase of household appliances, or other similar purposes. The name of the direction of lending speaks for itself. The loan is provided to meet the specific needs of an individual.

What consumer loans are there? The terms of the loan are medium-term. But there are cases when a consumer loan is issued to an individual on a long-term basis - more than 50 months.

The conditions for obtaining a loan are: stable income, good credit history, availability of collateral and so on. The longer the loan term, the greater the amount of the overpayment.

The amount, compared to other programs, is not very large. But in terms of interest rates, there are also better bank offers. This parameter may differ in different banks, depending on some conditions, such as: availability of collateral and guarantors, term, credit history, financial capabilities of an individual.

Consumer programs are in demand among clients because the amount is issued without specifying the purpose, therefore, the borrower received the money and can dispose of it at his discretion.

Car loan

One of the types of targeted financing, issued exclusively for the purchase of a car. Loan amounts are large and interest rates are low. What is more profitable than a consumer loan. It is possible to lower the rate even more if you buy a domestic car, and not a foreign car. Of all the types of loans, this is one of the most popular targeted programs.

By term - a medium-term loan, which is issued from 1 to 5 years for a domestic car, and if a foreign car is purchased, the term is increased to 10 years.

When applying for a car loan, a prerequisite is the provision of the purchased car as collateral to the bank for the period of loan repayment, as well as mandatory insurance of the client's life, his he alth and the object of the contract - the car. Without these conditions, the loan will not be issued.

The Bank may require you to provide the following package of documents:

• two identification documents - a passport is required and a second one to choose from - a military ID or driver's license;
• certificate from the military enlistment office for men of draft age who cannot serve in the army for any reason;
• income certificate;
• birth certificates of children, if any, and others.

The exact list of required documents will be provided by a bank employee, because it is different for each financial institution.

What are home loans?

Mortgage loan issued for purchaseany housing. At the expense of credit funds, both an apartment and a private residential building can be purchased. Own square meters can be bought at the expense of a consumer or mortgage program. The first option is suitable for those who already have a certain amount. The size of a consumer loan, as a rule, does not exceed 1 million rubles.

For those who have a minimum start-up capital, mortgage lending is suitable. The amount is large, the term is long, and interest rates are minimal.

Before you take out a mortgage, you need to sensibly evaluate your financial capabilities, because the monthly payment is rather big. If an individual is unable to repay the debt under a mortgage agreement, then the housing will be transferred to the bank, and the citizen will be left with nothing.

A prerequisite is an initial payment, which is about 15% of the total loan amount. Owners of state support in the form of maternity capital can transfer it to the account of the first installment. A guarantor may be required to obtain.

People who want to buy their own home or expand their existing square meters often wonder what mortgages are. Banks currently offer the following programs:

• for secondary housing;
• for real estate under construction;
• under the construction of a private house;
• for the purchase of land;
• for suburban real estate.

Education loan

One of the types of loans for individuals. Is differentlow interest rate and deferred payment until graduation. In most cases, lending to such areas is made at the expense of state support, due to which the interest rates of targeted loans for education are reduced. It is important to note that Mr. support is not available in all banks. The list of credited educational institutions is limited. It all depends on the cooperation between the bank and the educational institution. In some cases, you can draw up a debt contract for studying in another country.

Overdraft

Borrowers are often interested in what kind of loans in Sberbank and other banks for individuals for a small amount with quick processing. Overdraft is one of them. If an employee is transferred a salary to a bank debit card, and the next payment is still far away, while an amount commensurate with the salary is needed right now, you can borrow it from the bank by the same transfer to the card. As soon as the transfer from the employer arrives on the card, the bank's borrowed funds will become unavailable. The benefit of the bank is in the return of the loan amount and interest on top. In case of non-repayment of the overdraft, fines and subsequent refusal of the loan are provided.

Loan on trust

Getting popular with customers. The loan is non-targeted, so the bank does not need to be informed of the intentions for what needs the money is issued. The amount of the contract is small, interest rates are not the highest. You can get a trust loan with only a passport.

A loan is beneficial if there is no time to collect the necessary documents and you needinsignificant amount.

Loan for urgent purposes

Another type of trust loan. Issued without guarantee and without collateral. It is issued quickly - about 5 minutes, and only with a passport, no other documents are required. Bank risks are offset by high interest rates.

Best Deal

It is not enough just to know what loans are, it is important to be able to choose the best loan options for you. After all, one way or another, the money received will have to be returned, and the amount of the return will exceed the amount issued by the financial institution.

It is definitely impossible to determine which loan is the most profitable for an individual for several reasons:

• different lending purposes;
• different bank conditions;
• duration of the debt agreement, etc.

If a borrower takes out a loan for certain purposes, for example, to buy a car, then a targeted loan is suitable - a car loan, for the purchase of a home - a mortgage loan.

In the case when you need an insignificant, but urgently needed amount, you can apply for a trust loan or a loan for urgent purposes.

For an individual who does not want to dedicate the bank to their plans for spending borrowed funds, a consumer loan is intended. To pay for vocational education, a client can also apply for a target loan at a bank with which his university cooperates.

Before you go to the bank, you need to collectinformation about what kind of loans there are in this organization, the conditions for issuing them, interest rates, current shares, documents necessary for drawing up a debt agreement.