Loans and Types of Collateral

by admin on February 28, 2014

Borrowers should take different factors into account, including variable vs. fixed interest rate, repayment schedule, amortization, and others. Financial institutions and credit unions offer conventional mortgages, bridge financing, and other options. There are different assets to offer as collateral, for example, land, vacation or second home, and others.

Banks offer better terms to borrowers who opt for a secured loan because they can seize the collateral in case of default. Unsecured loans are different in that borrowers are not required to offer collateral. Your credit score is the most important factor that shows banks whether you will be able to meet your monthly payments. Financial establishments in Canada that offer personal loans include credit unions, online banks, finance companies, and others. There are different types to choose from, including mortgage, consumer, auto, and student loans. Credit unions offer affordable interest rates and better terms than other financial institutions. Many customers apply with online banks because they don’t have to go to a local branch. They usually offer attractive terms and interest rates. There are many benefits to choosing an online bank, among which convenience and safety. Online establishments effectively compete with brick-and-mortar banks because borrowers have the oMortgage Pressurepportunity to review their interest rates and other terms.

Other Lenders

While there are advantages for borrowers, decent credit is usually required. Most lenders offer a fixed rate loan with a term of up to 5 years. Peer to peer lending is one alternative whereby private lenders offer personal loans in Toronto to pre-qualified borrowers. Lenders benefit from higher returns while borrowers enjoy a quick approval process. Borrowers are offered business and personal loans. The platforms offer different loans, including secured and unsecured. A payday loan is another option for borrowers who face an emergency such as medical bill, car repair, and others. The interest rate is high while the loan amount varies from $100 to $3,000. The fact that lenders do not run a credit check explains why borrowers are offered unfavorable terms. Peer to peer and payday lenders and banks are not the only players. Student loans are one example of government assistance that offers repayment benefits. This is one alternative to grants and scholarships that comes with affordable interest rates and payments.

Another advantage for borrowers is that they are offered flexible payment solutions, along with extended repayment schedules. Cosigner is usually not required. While the interest rate is lower than credit cards and other types of financing, it is important to make timely payments. One benefit of subsidized loans is  forgiveness meaning that borrowers are no longer expected to make payments. There are different types of forgiveness, including closed school and bankruptcy in discharge. Other examples are public service and teacher loan forgiveness.

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