Kinds of Bank Loans

Banks loan money for many different purposes. While some banks may specialize in commercial loans, most have a full range of loan products to offer depending upon which type of loan may be most appropriate. Those seeking loan information regarding loans for purchasing homes, automobiles, or any other major purchase need only visit their local bank to visit with one of the bank’s loan officers.

Unsecured Loans…

Generally, unsecured loans are based upon one’s credit record combined with obvious ability to repay the loan. Since banks must base their decision to make this type of loan on their trust that you will repay the loan as agreed, unsecured loans are only offered to customers with excellent credit history. Unsecured loans are also called personal loans because the promise to repay is personal and not secured by any type of collateral.

Secured Loans…

Loans that are made with some type of collateral pledged against the them are more common, and are more easily obtained. There is less risk regarding repayment for the lender with any secured loan. For example, if an automobile is financed with a 20% down payment required, the loan probably does not exceed the market value of the car. For that reason, the bank is not exposed to losses of any consequence if you do not repay the loan as agreed.

The same situation exists in any mortgage loan for property purchases. If you do not pay as agreed, the lender can seize the property to resell it in order to satisfy the balance owed. This is not to say that banks will offer secured loans to customers with bad credit records, because they will not bother dealing with people whose credit history is not good. Each individual bank has its own method of auditing loan applications to protect against deviations from their own norm for approving any loan issued.

In the case of loans being sought for commercial (business) purposes rather than personal use, each bank has different criteria. If an individual is backing the actual loan, his/her credit rating will be considered. Companies such as Dunn and Bradstreet offer credit rating services for commercial entities, and may be used to establish the credit-worthiness of commercial applicants. Any commercial loan will only be granted in cases of good credit history and favorable financial standing. Banks will invariably require collateral for such loans.

Talk To Your Banker…

In the final analysis, a visit to your bank’s loan officer is in order to find out what types of loans are possible, and if you should consider making an application. Lending money is one of each bank’s primary ways to make money for its investors. They will be anxious to accommodate your needs if you qualify for a loan.

If you don’t qualify for a loan, they may be able to assist you with suggestions about ways to improve your credit rating for future consideration. This is one area where you need to get first-hand information for yourself, and not some anonymous suggestions. Access to bank loans is highly important to everyone, and should be carefully nurtured for future use.