There are investments that many people are unable to finance by reaching for savings. To finance them, they must borrow. Bank loans are most often incurred for extra expenses. What are the types of loans and which one should you choose?
Types of loans
Bank loans include cash loans, i.e. those with no specific purpose and special purpose loans (learn more about the profitability of special purpose loans). So you can choose:
- car loan – we usually borrow money from the bank to buy a new or used car, but the money from this loan can also be used to buy other vehicles;
- mortgage – in this case it is most often used by people who want to buy an apartment or house; it may also be granted for the construction of a house;
- installment payments – facilitates the purchase of goods: household appliances, furniture, electronics;
- credit card credit – when we receive this credit, we receive a limit from the bank that we can use to pay by credit card;
- renewable – granted to persons who have a current account;
- cash – for any purpose.
For a bank to grant a loan, it must be certain that it will be repaid. So before he grants the loan, he must check the creditworthiness of the person who applied for it. She must provide a statement of her income, and will also check that the applicant is credible by reading the documents gathered at the Credit Information Bureau and the National Register of Debtors. Thanks to this, he can check the borrower’s credibility and credit history. If you have regularly repaid financial obligations in the past, the bank will know that there will be no problems this time.
The bank is also interested in how many people are dependent on the person applying for the loan and what amounts are consumed by standing accounts. The decision depends on your creditworthiness assessment. If the bank decides to grant a loan, creditworthiness will also depend on its amount. People whose creditworthiness is rated high can get a higher loan. Due to low creditworthiness, the bank may refuse to grant a loan. So before you go to the bank, you should prepare for an interview by preparing a preliminary credit simulation. To this end, it is worth using the online creditworthiness calculator. Enter the amounts in the appropriate boxes, among others regarding monthly expenses, and you will receive information on what credit you can afford.
In this situation, many people apply for a loan from parabanks. Many of them do not check creditworthiness. But a loan from such an institution is very expensive. This is not a solution worth using.