Most of the traditional banks having their own principle while granting loans to their applicants or the one who requester for loans. They type of loans classified into two major categories. i.e.
Secured loans are loans backed by an asset such as a house in the case of a mortgage loan or a car with an auto loan. This asset is a guarantee of the loan. When you approve the loan, you agree that the lender can re-acquire the collateral if you do not repay the loan as agreed. Although lenders are returning the property to a secured, defaulted loan, if you default loan. When lenders recover the property, they sell it and use the proceeds to repay the loan. while approving these secured home loans most of the banks will closely inspect all the major home loan approval elements such as eligibility credit ratings, good credit score, age, financial status, loan repayment…Etc.
Unsecured loans are loans that are not guaranteed with any kind of collateral. For example, the bank does not have the ability to take your home or car if you stop making payments on an unsecured loan. The unsecured loan is based on your promise of payment (and the lender’s confidence in your ability to pay).
Well, you give in to guarantee the good which you possess, in exchange for a sum intended for any use: purchase of a housing abroad, repayments of debts, family help. In addition, the mortgage must be exclusive to the lender. Important: Mortgage interest rates are higher than rates prevailing in the traditional real estate market. On the other hand, this type of loan is very flexible to use.
Bank loans correspond to the most common financing, almost all financial organizations are able to distribute them. This financing is allocated for any type of real estate project, acquisition of the principal residence, secondary or rental. A loan is said to be guaranteed when a property, such as a property or investments, is allocated as security for its repayment. As for the unsecured loan, no property is assigned as security for its repayment.Most of the people who are requesting loans to the banks should have to meet the loan eligibility criteria which means we need to obey all the terms and conditions of the financial institutions or the money lenders which is very much compulsory. when it comes to interest rates every financial institution have their own interest rates which is the relay on the type of loan that the applicant requesting for.
In the modern days, many of the banks will have the interest rates are around 8%- 10%…Etc. Having greater credit score will strongly impact while granting loans because it is one of the major key element of the home loan for approving loans to the applicants.