Borrowing money is maybe the most well known financial service and it has been that way for some time now. And because of that there are many loan types that we can choose from and in this post I will try to include as much of the as I can remember.
Mortgage is maybe the most well known loan type and people take out mortgages to cover their home buying costs that have skyrocketed in the last few decades. Mortgages usually are loans with small interest payments that can have loan repayment terms of more than 20 years. And the total amount of money that people can borrow using a mortgage can vary from 10000 GEL to more than 200000 GEL. Usually when taking out a home loan you will need to use your house as a collateral or you will need a guarantor to secure your debt. Banks and private lenders usually give out mortgages with very strict conditions and before your loan can be approved your credit history will be investigated so that the creditor knows if you will be able to repay your debt.
Online loans on the other hand are short term debt options where you can take out a loan from 50 Lari to about 1000 Lari with the repayment therm from a couple of days up to 3 months. These loans are made for short term financial troubles and usually people repay them in one single payment from their next wage. Online loans have spread rapidly in Georgia in the last few years and they have become a huge force but the companies that give out these loans have made a lot of money doing it. Online loans can be great for a multitude of reasons but the most common reasons include medical payments, car repairs as well as rent and paying for groceries or other monthly expenses.
Consumer credit or consumer loans are a mid-term loan type where you can get from 1000 up to 10000 Lari without the need for a guarantor or a collateral. These mid-level loans are a big part of the economy and people take them for many different reasons starting from house repairs to holiday trips and other things that require a bit more money than you can get from short term loans. This loan type usually has bigger interest payments if you compare them with some long term debt options but they are still smaller than short term debt interest payments.*რეკლამა
Credit cards is another variation of a mid range loan type where you can get a loan without any need for a guarantor or collateral. With credit cards you get a credit limit and you can spend as much money as you like as long as you stay in that limit. You can either spend that money with online payments or buy things with your credit card but when you take out cash then usually you will have to pay a penalty cost of a few precent from the total sum. Credit cards are very convenient but you have to apply for them in your bank and pay a monthly payment that can be quite expensive in the long run if you are not actively using your card.
Investment credit is another loan type that is usually reserved for businesses and high net worth individuals. Investment credit is usually used to fund something that will in the long run make you money but that needs a big up-front investment to start that process. Investment loans can be used either for real estate purchases or for making businesses and other similar things. These loans are harder to get and they usually have larger annual interest rates because the lender is not 100% sure that the borrower will be able to repay that debt.
Credit line is a relatively new loan type where you get something similar to a credit card but you can get these loans from online lenders but credit cards are usually supplied only by Banks and large financial organizations. A creditline acts just like a creditcard but it is all virtual and you can borrow multiple times till you reach your credit limit. Credit lines are quite effective but they also have larger percentage rates than some long term debts.
Student loans are another well known loan type where you can get money to pay for your collage tuition or living expenses. Because university expenses have grown significantly then these student loans that consumers get are also getting bigger and bigger. But because they have very small annual interest rates then the total interest that is payed over the course of the whole loan repayment schedule is not that significant. One thing that is quite unpleasant about student loans is that you can’t get out of your debt agreement even if you declare bankruptcy and the only way to get out of that contract is to repay it.
Car loans are very common and people buy new as well as used cars with the money that they don’t have but then over the course of a couple of years they repay that debt. Car loans can range from 1000 Lari to 50000 Lari and depending on your income and the price of your car you can have a repayment schedule from a couple of months to 10 years. Car loans have high interest rates but they are secured by the car itself and that means you won’t need a guarantor and you can also get this loan with a bad credit history.