Achieve financial freedom by making a loan. Avail of that loan, use on purpose, and be financially free. The myth says, “Getting a loan is a bad idea,” but in fact, getting a loan can get you out of debt for good!
A loan is a credit vehicle where you get a sum of money secured from a lender in exchange for future repayment. With the imposed interest or the finance charges, the borrower agrees to pay the loan according to the lender’s terms and conditions.
Loans and lending practices date back to the ancient times practiced by the Romans and the Greeks. It evolved along the way by introducing several loan practices until it became a powerful economic source of revenues when the Europeans introduced a loan interest in the 13th century.
Loan interest rates are an important component of many investments. It influences the return on savings, the cost of borrowing and provides insights into the economic and financial markets’ future activity. Interest ensures that the resources of the economy are properly allocated.
If an interest rate is too low, few people and entities will be willing to lend or give access to loans. A positive interest rate gives the lender assurance of their incentive when they lend to borrowers to fund projects.
The Loan Options
Valuable investments do not always need funds directly from the investors’ pocket; often, valuable projects and investments are funded by loans. Like if you plan to start a business; whether a brick and mortar store or an online store, you can always get off the loan opportunities available to finance your start-up business.
There are several other loan options that institutions offer. Information is directly available in banks and any institutions, or get them online at Crediful.com for detailed information. Find this list for a guide and better understanding of multiple loan options for your specific need:
Personal Loan
A Personal loan has no collateral and can be used to finance anything, making it an expensive way to get the money because it is unsecured. The loan can be used from bills payment or maybe to fund a trip or a vacation. Loan approval is limited to a few hundred or a few thousand dollars, and repayment is from two to five years.
Since the loan does not require collateral, a commercial bank offers the loan with an interest of 6% to 36%. However, the borrower has to provide proof of assets worth at least equivalent to the amount borrowed, and it has to be verified by the bank. Loan processing takes a few days over a two-page length application process.
Home Equity Loans
Home Equity Loan or equity loan is a type of consumer debt – a loan purposely granted to borrowers for personal, household, and family purposes. In HEL, a homeowner can borrow money according to their home’s current market value against the homeowner’s mortgage balance. This loan requires collateral, which is the equity of the home being loaned. Loan approval depends on the credit score and payment history.
Repayment schemes of a traditional home equity loan are identical to a conventional mortgage, wherein the principal plus interest is paid at a regular and fixed payment term. In the event of non-payment, the lender can sell the home to pay off the debt.
Always compare interest rates and terms and conditions before entering into a home equity loan. Small banks and credit unions offer loans at lower interest rates and better terms compared to large banks. You can even opt for a more personalized service if you are willing to wait a lengthy processing time.
Small Business Loans
Small business loans are offered by certified lenders like Kapitus as well as most commercial banks. Loans like this are typically provided to borrowers setting up a new business or expanding an existing one. A business loan repayment period of up to 25 years is required, with a formal business plan as the primary requirement.
Business Loan And The Online Business
It is necessary to make a business plan to guide you closer to your dream business, it is a document that contains corporate goals, earning projections, cost, and returns, and a plan for growth for the business, whether traditional or online business.
A business plan for an online business is typically the same as that of a traditional business model. All of the activities of an online business are conducted entirely online. Such activities as ordering, inventory, marketing, etc., are organized and done online.
Like any other business, it is equally important to know the following if you avail of a loan to finance your online business:
- Always decide wisely on the loan type that you need.
- Gather the documents and document support for faster loan processing to determine your approval probability.
- Compare business lenders to decide on interest rates, terms, and conditions.
- Apply for a business loan.
Takeaway
Loans allow you to start a business or expand the existing one; it has varying payment terms, interest rates, and conditions.
You can choose different loan types according to your need for a business start-up or business expansion. A loan is an instrument to make your business succeed; get a loan only when necessary, use it wisely, pay promptly, and become financially free.
Featured image source: https://unsplash.com/photos/lCPhGxs7pww
Author’s Bio:
Sylvia Hopkins is a writer and a blogger who specializes in email marketing campaigns and ghost blogging. When not working, Sylvia spends some quality time with her family and friends.
