The Different Types of Finance Available

There are nearly always going to be a number of different borrowing options available for people to potentially apply for and then if accepted they can be taken out. When it comes to borrowing money people can usually apply for a whole host of different amounts for repayments then due back over a number of different repayment terms. In the financial market place people can often take out both short term loans and instalment loans for their borrowing loan needs. People here then will at least have the chance to take out a selection of different loan amounts and then also have the chance to repay the debts over a set number of different repayment terms. A common way to obtain short term loan would be via payday loans where people take out loans and then repay the debt with normally high interest as soon as they are paid again. A mortgage is a type of instalment loan which is common as with this product people take out larger loan values and then typically they repay the debt over longer periods of time. A mortgage is repaid over many years.

Short term loans are designed at helping people financially for the short term basis hence the borrowing type name. People with these loans should never ever see them as a long term borrowing solution. Typically they do charge higher interest but even on these products people should know that the shorter the time people have the finance for the higher the interest on the product. Payday loans for example only give people the loans for a single monthly period of time and they can charge around £30 per £100.00 borrowed once someone was to ever take these out. People therefore borrow payday loans for only a matter of quick days yet they pay around 30% interest on what they borrow. That is definitely higher interest than what a lot of other products would charge and there are almost certainly going to be much cheaper borrowing solutions out there.

Also when these loans are obtained people repay the debt over short space of time and over large repayments. A payday loan when borrowed for instance must be repaid in full back to the lender as soon as that customer is paid again from their work. Other short term loans are actually defined as such if the debt is settled within a twelve month period of time. A short term loan is only known as a short term loan if paid back within a twelve month period of time. It can be because of this that the loans require people to pay back the debt in large monthly instalments in order to clear the balance over the short time frame. Instalment loans on the other hand require people often to repay the debt over longer periods of time as they typically loan people more money. They can then expect people to repay the debt over longer time frames but in much smaller and realistic amounts for people to repay.