SIMPLE DEFINITION OF ALL LOANS

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WHAT IS A MORTGAGE?

The mortgage is a type of loan provided by financial institutions. This type of loan is much secure that is why the institutions charge low-interest rate as compared to the other ordinary loans. The question is how this loan is secure as compared to other ordinary loans. The answer is simple the financial intuitions keep the asset of the buyer as security if a person or organization fails to pay back the loan, the financial institution is legally authorized to sell the asset of the buyer for recovering their money.

IS A MORTGAGE THE SAME AS A HOME LOAN?

There are different types of home loans, if the financial institution keeps the home documents as security then it is a mortgage loan but if the financial institution is providing a home loan against your salary or due to your strong business worth then it is no mortgage.  

 HOW  DO STUDENT LOANS WORK?

The students who can not afford to pay fees to facilitate such deserving and competent student government-provided a loan through their complete or half fees directly paid to the institutions. After completion of the degree, students are supposed to pay back in installments. Some private institution is also paying loans to students on the interest rate. The good thing about this loan is its installments are started after the employment of the student.

WHAT IS FAFSA?

That is the payment by the Federal government to students it knows the Federal Student Aid. This is a nonrefundable payment by the federal government for needy students.  

HOW DO AUTO LOANS WORK?

This is also a type of loan provided by banks or any other financial institution. The purpose of this loan is specifically the purchase of the car. The loan provider organization mortgage the car till the completion of payments. This is also a type of secure loan.  So, comparatively, it has a low-interest rate and other charges. Before paying the loan, the banks ensure that the buyer can pay the installment or not.

HOW DO PAYDAY LOANS WORK?

Payday loans are short terms loans, the best example of these loans is a credit card and salary advance. Usually, the buyer is required to pay it in the month, this loan insecure loan so, its interest rate is high. This type of loan is not good. It also harms the credit history of the individuals.   The People who getting monthly income are eligible for this type of loan.  

WHAT IS ADVANCE SALARY LOAN

This is also a type of loan; the banks pay loans to the salaried persons based on their salary. The banks get the security from the parent department of the individuals. So, the banks deduct their monthly installment from the salary of the individual.  

WHAT IS A CREDIT UNION?

The credit union can be simply defined as, the small organization of a group of people who pay loans to people and share the profit. The credit unions also charge interest rates on their loans.

 

WHAT IS COMPOUND INTEREST?

This is a type of interest rate in which the interest earned is also added to the principal amount every month the amount will increase, the formula of interest rate is not good for the buyer, but it is for the payer of the loan.

WHAT IS DEBT CONSOLIDATION?

Debt consolidation can be simply defined as getting a new big loan to pay multiple small loans. The organizations also do this practice and individuals also do this. For debt consolidation, it should be kept in mind that the interest rate of big loans should be lower or equal to all small loans otherwise the decision of debt consolidation can create more problems for you.

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