Loans are a financial transaction by which a natural or legal person, usually a financial institution, grants a given amount of money to another in exchange for interest that will be paid together with the money granted, typically in monthly installments.
In exchange for the money obtained through the loan, the holder undertakes to return the amount within a certain period, together with the interest accrued and other expenses associated with the process. The specific conditions of the loan are detailed in the contract signed between the involved parties.
Loans and Credits
Although the concepts “loans” and “credits” are often used as if they are common in banks, financial institutions of credit, or newspapers, loans and credits are two different financing products. Their characteristics and differences are below to help determine which option to use:
Loans
- The entity transfers the money in its entirety that was requested to finance a specific project, such as funding a home renovation.
- The repayment installments are fixed and monthly until the loan has been fully repaid.
- Interest will be generated on the total amount granted.
- The repayment is made to the lender and will not be available again.
Credits
- The entity disposes a credit account with a certain amount of money according to the borrower profile, and it can be used in part or total for any purpose.
- Repayment can vary depending on the amount of money used or has already been reimbursed.
- Interest will only be generated on the money used, not on the total money available.
- As money is reimbursed, the borrower will have that money available to use again.
Types of Loans and Credits
Within the United States financial market, a variety of loans and credits are commercialized, from conventional bank loans to finance projects to innovative private fast loans designed to grant financing on the same day and with little paperwork. Below are all types of loans and credits accessible in the United States.
Personal Bank Loans
Personal loans offer relatively high amounts of money, from $3,000-$75,000. Its repayment period ranges between 12 months and ten years, depending on the amount requested, and funds are returned in monthly installments of the chosen amount. These types of loans are designed to finance large projects. Additionally, it is currently possible to find loans for ecological projects.
Quick Personal Loans
These are loans granted by non-banking entities and offer amounts of $100 up to $5,000 in less than 24 hours. These loans can be contracted online without changing banks or obtaining related products. These are some of its advantages and many reasons why these loans can be obtained quickly. Quick personal loans usually cost 3%-5% per month. The return period is between 3 months and three years, and the repayment is made in monthly installments.
P2P Loans
P2P loans, also known as crowdlending, are loans for individuals managed and granted through crowdlending platforms or platforms from which company financing is granted. These platforms of collaborative loans put individuals or legal entities that need financing in contact with independent investors who want to lend them money to obtain a certain profitability.
The interest in these products may differ depending on each project’s credit rating. Therefore, the better the profile, the lower the assigned interest.
Mini Credits
Online mini-credits are the fastest product and have recently become one of the most popular products. With these credits, new clients can secure limits of $50-$300 or up to $1,000 for existing clients.
The application and grant process for mini-credits lasts only a few minutes. Repayment is made within 30 days as a single payment consisting of the money requested plus the 1.1% daily interest generated.
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