Alternative financial service companies offer a wide range of financial services and products, ranging from short-term loans to mortgages. Let’s look at each type of loan and the major differences between them:
- A short-term loan is typically an agreement with a lender for a simple loan of a modest sum to be repaid at a specified interest rate over a short period of around 30 days. The benefits of short-term loans are that they are convenient and swift to arrange. They can increasingly be applied for in minutes online on a laptop or on mobile phones. They help you get through the short-term cash requirements that we all have in our busy lives, where immediate cash is the only solution. They are however not for long-term financing needs.
- A lease is a longer term loan to buy or rent a tangible asset such as a motor vehicle with monthly or regular payments to the lender.
- An instalment loan is meant for larger expenditures like house improvements, medical expenses or even a wedding, when a bit more cash is required to cover the cost. The loan is usually repaid in a number of scheduled repayments;
- A loan in return for collateral means that the collateral provided will guarantee the repayment of the loan;
- A consumer line of credit is an arrangement between a lender and a customer that establishes a maximum loan balance that the lender permits the borrower to access or maintain. It is effectively a source of funds that, for peace of mind, can be readily accessed at the borrower’s discretion whenever it is needed.
- A mortgage loan is to purchase real estate, with an agreed fixed or variable rate of interest over a long term period, with the property being provided as security for the loan.
Many of these services and products are increasingly being offered online and on mobile phones to make them convenient, easy and swift to access.