Types of Loans

Loans

Loans are a means for businesses and individuals to be able to borrow money from lending institutions such as banks. Broadly, these loans can be divided into three main categories. These categories are:
•    Real estate loans
•    Business loans
•    Personal loans
Let us look at what these loans entail in detail.

Real Estate Loans

Real Estate Loans

These loans are related to property and real estate. The most common loan that is taken out in this category is the mortgage loans which help borrowers buy a home. Once the borrower owns his home, they can continue to take out loans against it in the form of a home equity loan. They can also attain a lower rate of interest or a payment conditions that are more favorable. Loans taken on land also fall under real estate loans. These loans are taken out by people on land where they wish to build their home in the future.

Business Loans

Business Loans

Business loans can be further divided into two categories. First are the ones that a business borrowers from a lending institution rather than an individual borrower. But a business loan can also be a loan taken out by an individual who asks for a loan for the purpose of business related activity.
Business borrowers have a wide variety of options available to them regardless of if they are a sole trader or a big multinational company. Business borrowers have instruments such as credit cards, equipment finance and many other loans that are specific to your business. This can also incorporate auto and building loans for many companies.

Personal Loans

Personal Loans

Personal loans are basically loans that are not taken out for the purpose of business activity. Most people are experienced with personal loans and they are in the form of credit cards and auto loans – which are quite common today.