When borrowing money you will discover that there are various types of loan contracts which enforces different payday loans terms depending on the agreement reached upon by the borrower and lender. Promissory notes are the simplest form loan while more complex ones are those offered by banks and other lending institutions such as mortgage, vehicle and educational loans. Whatever types the loan is and the term it contains, they are always controlled by state laws. For the protection of both the borrower and the lender, laws for loan agreements have been enacted simply to see to it that interest rates are not abused and that both borrower and lender follow the terms of the contract. There are two general types of loan agreements entered into by most individuals today. These are consumer credits which include open-end credit option and closed-end credit option and the second are standard loans which include mortgages, educational loans, home and property loans and personal loans.
Open-End &Close-End Consumer Credit
Open-End Credit is a consumer credit type that can be used by an individual several times over on any type of purchase. Also known as revolving credit, purchases made from this type is paid in full at the end of the month, amortized monthly or by just paying the minimum amount required. The best example of this is the CREDIT card. Also known as installment loan, Closed-End credit is specifically used to pay for a specific purchase such as appliances and electronic gadgets. The credit amount plus interest is amortized monthly until the whole cost is paid out.
Loans on the other hand have varied types but their use is more specific. There are several variable involve when you commit to these various types of loans. Most common are educational loans for college students, mortgage loans for property buyers, car or vehicle loans, and personal loans normally used for personal expenses. There are also veteran loans which are specific for veterans who mostly are cash strapped, small to medium scale business loans and payday loans which are normally short term minimal amount being lent. The rest are home equity loans and cash advance loans.