Commercial banks are depended on Loans and Deposits. There are three types of deposits are available. Like Savings A/C deposit, Deposit Pension Scheme (DPS), and Fixed deposit.
But there are several types of Loans. Such as CC loan, Home Loan, Mortgage Loan, etc which can be two types only if it calculated by time.
Like the short term loan and long term loan.
Let’s describe some types of loans offered by
Cash Credit A/C means, you will get cash for a specific period but if you don’t use the money you are not going to pay interest. But if cash used interest counting starts automatically.
To get these types of loan customer may have a business or mortgage something. This is a short term loan.
To run your business or set a new one if anyone needs some money Mortgage Loan is the best. It’s a long term loan. To establish the business, businessmen always like this one.
Just need some fixed asset which will be deposited to the bank as security. And debtor will pay a very small amount every month.
Home loan is to develop your land property. There are several Govt. and Non-Govt. financial companies including banks can provide the Home loan.
It could be to renovate your flat or to raise your building you will get this loan.
Debt Consolidation Loans:
A consolidation loan is meant to simplify your finances. Simply put, a consolidation loan pays off all or several of your outstanding debts, particularly credit card debt.
It means fewer monthly payments and lowers interest rates. Consolidation loans are typically in the form of second mortgages or personal loans.
Student loans are offered to college students and their families to help cover the cost of higher education.
Like mortgages, auto loans are tied to your property. They can help you afford a vehicle, but you risk losing the car if you miss payments.
This type of loan may be distributed by a bank or by the car dealership directly but you should understand that while loans from the dealership may be more convenient, they often carry higher interest rates and ultimately cost more overall.
Personal loans can be used for any personal expenses and don’t have a designated purpose.
This makes them an attractive option for people with outstanding debts, such as credit card debt, who want to reduce their interest rates by transferring balances.
Like other loans, personal loan terms depend on your credit history.
Payday loans are short-term, high-interest loans designed to bridge the gap from one paycheck to the next, used predominantly by repeat borrowers living paycheck to paycheck.
The government strongly discourages consumers from taking out payday loans because of their high costs and interest rates.
Latter of Credit (LC):
It’s most important for international businessmen. Typically used in international trade, this document allows entrepreneurs to guarantee payment to suppliers in other countries.
The document substitutes the bank’s credit for the entrepreneur’s up to a set amount for a specified period of time.
There are more loans with different types of banks, But actually, loans are all same.