Lending and obtaining time payments have become a common thing in the present society whereas back in the day it was rather a shameful thing to be owing to someone. Today this has even become a trend and investment option as people have developed and advanced. People have realised that what banks do for a living can be imitated by people alone and could be done for a living. Today people take time payments and invest it somewhere and getter a better return that the interest they are liable to pay and make a profit out of it. As a result of this whole process lending money has been categorized into different segments. Therefore, here are a few such common categories.
This is one of the most common types of loans among the low income earners. The reason why it is popular among them is that their income is not sufficient for them to survive till one cycle of payment is over. In other words, their salary is not enough for them to survive till they get their next salary which results in them asking for a salary advance instead of staying till the end of the salary cycle. Employers find it harmless for themselves and therefore it is been established in today’s world.
Mortgages are another very popular type of loan among the society. This has been in existence for a very long period of time and therefore could be recognized as one of the oldest types of lending in the world. What is done in mortgages is that people are allowed to pawn their house and take money equal to the value of value of your house. They are allowed to pay it in annually with a small interest until the end of the lending period. It is also said that the lowest interest rates among landings are for mortgages.
Retirement and Life Insurance Borrowings
This is one of the most special type of financial borrowings in the recent history. This was not available back in the day since retirement payments and insurance are two new concepts which emerged in the recent past with development of the business world. According to this type of borrowing, the customer is allowed to get money for credit out of their retirement fund or from their insurance fund. This is more or less like an advance payment which is similar to salary advances. However, the borrowings need to be compensated before the retirement age or the expiry of the insurance policy which otherwise leads to severe tax consequences.
There are many other types of lending and borrowing mechanisms available in the market today although these are a niche out of it.
Harold Prado April 14th, 2016
Posted In: Business Services