What are the main types of bank loans ?

Today, there are a variety of financial institutions and private organisations that offer their clients loans for a certain period of time and at a certain interest rate. The loans that these financial institutions and private organisations offer are numerous. But, among these loans, there are some main ones that this article will introduce you to in the following lines.

The adjustable loan over a given period

The adjustable loan is a type of loan that is quite common nowadays and gives the possibility to the subscribers to make the different monthly payments evolve downwards or upwards. It is a loan that also gives them the possibility of deferring one or more monthly payments and making partial early repayment. Generally, adjustable loans are home loans with an adjustable or fixed rate. In short, an adjustable loan is a loan that allows the monthly payments to be adjusted to some extent to fluctuations in income. Today, the standard for home loans is the adjustable loan because it offers the borrower more flexibility. When it comes to home loans, almost all financial institutions offer this type of loan. There are also some consumer loans that can also be modulated, but this modulation is according to a very limited list of options.

The loan with constant capital repayment

The loan with constant capital repayment is a formula that is very rarely used by individuals, but is intended more for very specific financial arrangements and for professionals. In this type of bank loan, each instalment is used to repay the same capital, a practice which in practice results in a gradual decrease in the monthly payment over time. In the constant repayment loan, the interest is calculated each time on the outstanding capital, which means that the total amount of the repayment decreases over time, but gradually. When you compare a constant repayment loan with a fixed term loan of the same duration, you will find that the first has a much lower overall cost than the second. This is the main reason why this type of bank loan is intended more for professionals.