Loans
Lendrs offer their clients a wide range of lending options. Each of them has pros, cons, and their own characteristics. To make the right choice, you need to know them.
What is a loan?
A loan is the issuance of money in an agreed amount by transfer to an account, card or in cash. Terms for issuing loans: payment, urgency and repayment. This means that for the service rendered, you will have to pay interest or a commission (or both), as well as return the money taken within a certain period. The simplified procedure for issuing and the short term of the agreement are the differences between loans and credits.
What are loan types?
General types of loans in payday lending companies:
- Payday Loans – short-term;
- Point of Sale – loans at points of sale, from several months to a year or two;
- Installments are usually long-term, with repayment in equal installments throughout the entire term.
According to the method of issuance, loans are distinguished:
- in cash – disbursement of the loan amount through the lender’s cash desk or transfer by money order;
- to a card – money is transferred to the specified details of the card account;
- through payment systems – PayPal;
- to a current bank account – for the convenience of borrowers.
By the way of issuing:
- unsecured – for the purchase of goods or payment for services. For example, to purchase furniture or equipment, to pay for studies or special events, for treatment;
- under the surety – a separate agreement is signed with the surety (relatives or third parties can act);
- secured – lending with the provision of collateral (except for residential real estate, the use of which as collateral is prohibited by law). The pledge or surety will be the guarantor of the loan repayment. As a rule, they are issued upon agreement of an increased loan amount for a long period.
By payment method:
- annuity – repayment in equal installments every month;
- differentiated – interest is calculated on the balance of the debt.
By the way of application:
- online loans – the entire procedure from submitting an application to transferring the loan amount occurs via the Internet at any time of the day;
- classic – issued in the MFI office with the personal presence of the borrower.
- Leadership is occupied by online loans without collateral and surety.
Advantages and disadvantages
Like any loan product, loans have their positive and negative properties:
Pros:
- efficiency – it can take only 10-15 minutes from submitting an application to transferring the loan amount to the card;
- minimum of documents – registration is possible upon presentation of only an ID;
- filling out an online application form – you don’t even need to leave your home or office to issue a loan;
- often the first loan can be taken out without paying interest for use (the amount will be small, and the term will be minimal);
- loans are available to students and retirees;
- you can find companies that will issue loans to clients even with a bad credit history – the risk of non-repayment is already included in the increased interest for use;
- various options for receiving money and repaying debt.
Minuses:
- higher interest rates and penalties for non-compliance with the terms of the agreement (in comparison with loans);
- there is no recalculation of interest in case of early repayment;
- for many cases, a shorter loan term will be a disadvantage;
- upon the first application, the loan amount will be minimal;
- the risk of fraud – it is necessary to carefully study the available information about MFIs and reviews of real borrowers.