What is a bank loan: types and terms of issuance

What types of loans exist

A bank loan implies the paid provision of money to an individual or legal entity on the condition of its repayment. Although loans are not divided into types in economics, they are nevertheless classified according to the following criteria:

• Financing subject. Borrowers can be individuals and commercial companies.
• Issuance term. Loans can be short-, medium-, and long-term. They can also be payable on demand.
• Purpose. Mortgage, consumer, agricultural, etc.
• Presence of collateral. There are loans secured by real estate, cars, and other assets. Funds are also issued without collateral.
• Amount. Small, medium, and large sums.
• Interest rate. Fixed and floating.

The Russian financial market is developing, and new products and offers appear each time. Requirements for borrowers are becoming more lenient, and limit amounts are getting larger,

Consumer loans

The most popular type of loan is a consumer loan. The funds received can be spent on any purpose. This is the optimal option if you urgently need a small amount.

You can calculate a consumer loan at Sberbank or another financial institution using the calculator on the bank's website, and receive the money in cash or online.

A loan can be issued under the following terms:

• Up to 50,000 RUB is the minimum amount. Up to 5,000,000 RUB is the maximum. If the financing amount exceeds this figure, the money is issued against collateral.

Please note! Regular borrowers with a good credit history can count on the maximum limit.

• The interest rate depends on the bank's tariffs.

Например, «Кредит на любые цели» Сбербанк выдает по ставке от 12,9%. Т-Банк — от 12,0% (без залога). Обратившись за помощью в ВТБ, новые клиенты могут рассчитывать на ссуду по 14,9%.

• Loan term. Without collateral, this is usually up to 5 years. If real estate is provided as collateral, the term can be extended.
• Surety and collateral. You can get funds at a lower interest rate by pledging real estate or a car. You can also count on more loyal terms if you bring along one or two co-signers.

Pros and cons of consumer loans

Advantages include:

• simplified application review procedure;
• minimal document package;
• quick decision-making;
• ability to spend money on any purpose.

Cons:

• high interest rate;
• small limit;
• short loan term.

Credit cards

Credit cards from Russian banks are another way to get money for your goals. To obtain this payment instrument, co-signers and collateral are not required. A big plus of the product is a grace period ranging from 50 to 100 days. Some banks issue cards with a grace period of up to 120 days. Financial institutions do not control how the money is spent, and most often issue the card based on a single document—the passport.

Disadvantages include a high interest rate after the grace period ends and penalties for overdue payments. Commissions are charged for withdrawing cash through a "foreign" ATM.

Car loans

Car loans refer to a banking product issued for the purchase of cars. You can take out a car loan from a bank under the following conditions:

• Car loan amount: up to 5,000,000 RUB.
• The interest rate depends on the car being purchased. For new cars, it is up to 10%, and for used cars, up to 20% per annum.
• Loan term: up to 5 years.
• Down payment. This depends on the requested amount and ranges from 10 to 25% of the car's value.

The advantages of getting a car loan are low interest rates and prompt application review. You can find out the decision on the day you apply, and sometimes within 30 minutes.

Disadvantages: a large document package and the need for initial savings.

Mortgage

Mortgage loans are provided by banks for the purchase of housing. It is unlikely that you will be able to get a mortgage without a down payment, so savings are required.

Mortgage loans are issued under the following conditions:

• Amount: up to 15 million RUB.
• Rate: up to 25%.
• Loan period: 10 years or more.
• Collateral: the apartment or house being purchased.
• Down payment: up to 25% of the housing cost.

Note! The article provides average figures. They can be either increased or decreased. Each bank dictates its own terms — something to remember when applying for a loan online.

What documents are needed to apply for a loan?

Depending on the loan, the following documents will be required:

• Application. Filled out online or at the office.
• Passport of a citizen of the Russian Federation with a registration stamp.

Please note! If the registration is temporary, a certificate confirming registration at the place of stay will be required.

• Certificates confirming the applicant's financial standing.

These are income and tax amount certificates from an individual or legal entity.

• Documents confirming employment.

Banks require a certificate from the employer, an extract from the work record book, and its copy.

Documents must be provided in original form. Certificates must bear the date of issue.

Loans are a profitable banking product that allows you to solve various financial tasks. To avoid troubles in the form of large fines and conversations with debt collectors, fulfill your obligations.