Finance

Understanding the Basics of Forbrukslån (Consumer Loans)

Life is full of uncertainties; like they say about the best laid plans of mice and men, things can go wrong at the least expected time. When you find yourself in such situations, the money in your savings might not take care of the situation. For others, it might be that they do not want to dip into their savings for such emergencies. 

When issues like this comes up, the best bet most of the time is to take out a consumer loan. A consumer loan can come with or without collateral or security as it is also called. If it comes without security it means that you do not need to stake any of your assets against the loan.  But those that come with security are backed by the borrower’s asset. 

In this article we will briefly discuss the basics of different types of consumer loans. 

Types of Consumer Loans

These credits come in different forms to be used for different purposes and they include the following:- 

Mortgage 

A mortgage in legal terms is an agreement between a borrower and a lender where the lender gives the borrower money to buy a property or against the value of a property. If the borrower does not repay as at when due, the lender has the right to take over the property. So in essence this is a credit secured for the sole purpose of buying a property or getting money against the value of the property. 

From the above definition it is already clear that this is a secure credit because the property which is the asset is the collateral. Remember that a collateral is asset that is staked for the loan so that if the borrower doesn’t pay as at when due, the lender takes possession of the asset. 

The duration for repayment for mortgages is between 25 and 35 years. It depends on the terms and conditions of the creditor as these differ from one lender to another. Click here to learn more about mortgage loans. 

Auto Loan

This is a loan given for the main purpose of purchasing a vehicle and it is a secured loan because the vehicle is the collateral for the loan. The repayment period can be anywhere from 2 years to 7 years.  

Credit Cards 

These are plastic cards issued by a bank or financial institution that enables the holder to make financial transactions. They provide a line of credit for the holder so that h/she can make purchases and make payments to the issuer on an agreed date. Failure to pay on the agreed date attracts a fine. 

This type of credit can either be secured or unsecured and the modality for the security of this loan is different from the security for other loans. It a recurring line of credit with monthly payments. 

Student Loan

This is a loan given for the main purpose of financing higher education. It is an unsecured loan and is repaid when the student graduates. There are private and government student loans; some can be co-signed by parents or guardians while others can be gotten solely by the student. 

Personal Loans

This is a type of credit that is given to an individual to sort out any personal expenses. It can be secured or unsecured and comes with different interest rates and other terms and conditions. These credit facilities can be gotten from banks, online lenders or credit unions. 

You can check out the 1clickmoney.com forbrukslån (consumer loan) offer for more information on the different types of consumer loans discussed. 

Conclusion

Having extra cash to play around with is an exciting prospect; hence a lot of people get into debts. This often times applies to credit cards and personal loans. A lot of people have dug themselves into financial ditches because they didn’t manage their line of credit well. 

 In this article, we shared just the basics of the types of consumer loans that are available. But you will do yourself a world of good by doing your due diligence before taking out any of these credits. Research properly, talk to a financial advisor, and map out a solid plan for repayment before you sign the dotted line for any credit facility.