How can I know what credit to ask for? What are the types of credit ? How many there are? In this post we will tell you what the types of credit are , and what each of them is for. Thus, depending on your needs, you can choose which one you think is the most convenient for your situation.
Before that, we will also explain a little what a loan consists of and we will also add at the end what are the criteria to follow to choose one loan or another.
What is a credit?
As we have well explained in some other post, a loan is a financial operation through which a person or normally entity transfers an amount of money to another, in exchange for the latter returning it, along with the interest generated and accrued. , under the terms and conditions established by the loan. In this way, the person who gives up their money is called the creditor , and the person who must return it is called the debtor . This would be a bit the scheme of the operation:
As we mentioned, there are many types of credits, depending mainly on three variables: term, destination and guarantee. The bank credit usually gives you one, typically banks, credit institution through the conclusion of a contract. It is very important to differentiate it from loans . While in credit, the bank grants you an amount of money and you can have it or not, paying only the corresponding interest on the part you use, in the loan, you pay interest for the entire amount of money they lend you, whether you use the money or not.
Next, we present the characteristics of the types of credits that exist:
It is the credit par excellence. It is the credit granted by a financial institution for the acquisition of a property already built, a land, as well as for the construction of houses, offices and other real estate, with the guarantee of the mortgage on the property acquired or built, which does not it may be sold until it is lifted. It is normally agreed to be paid in the medium or long term (15 to 30 years)
To apply for it requires a series of requirements, both personal and financial income. Interest rates are the lowest in the market, and terms are the longest. What characterizes the mortgage loan is that the amount of money granted by the entity must be used for the purchase or realization of a house on land that you already have, or the acquisition of land.
The basic characteristics of this type of credit are the following:
- Term: very long term
- Destination: specific
- Warranty: real property
Note: We recommend you visit our mortgage simulator to find out which mortgage loan would best suit your personal and financial situation. In less than a minute you will know the best mortgage loans that are being granted in Mexico, as well as their main characteristics, among which we find the CAT, the interest rate, the commissions, etc.
The credits oriented towards SMEs or companies are called productive credits, by which companies are financed and funded for a specific purpose, for example, purchase of raw materials or expansion of a manufacturing plant.
In other words, they are loans oriented to satisfy the needs of Working Capital, acquisition of goods, payment of services oriented to the operation of the same or to refinance liabilities with other institutions and suppliers.
The basic characteristics of commercial credits are the following:
- Term: medium to long term
- Destination: specific
- Guarantee: diverse, they can be the sales of the company or the machinery that is purchased.
Credit cards are the main source of financing for any person. Its main advantage is an open line of credit, anytime, anywhere, with just one plastic in hand. Like all credit, it allows you to have money that you do not have at the moment, but that you are sure you will have in the immediate future, for example, with the salary that you will receive next month. Credit cards can be divided according to their issuer, and can be:
- Bank cards , those issued by a financial institution such as a bank or a savings bank or cooperative
- Departmental or Retail cards, also called non-bank cards and which are offered by department stores or large department retail stores.
On both cards, the credit card and the departmental one, you can take advantage of month-long promotions without interest and other additional benefits.