Loans are broken down by purpose into purpose and non-purpose loans. Special-purpose loans are approved for a specific thing and generally have a longer repayment period, while non-purpose loans, as their name implies, are considered loans that you can use for any purpose. Non-purpose loans allow the use of financial resources according to the needs and wishes of the loan beneficiaries. Such loans have no specific purpose and are usually approved for shorter maturity. Typical security instruments are an insurance policy, a promissory note and / or a co-debt.
Non-purpose loans due to the short repayment term are among the most common loans, and are divided into framework, cash, pawn and mortgage loans.
Types of non-purpose loans
The non-purpose indicative credit is actually a current account overdraft. The loan amount depends on the amount of regular monthly income of the current account holder and may vary depending on the salary or pension.
This type of loan is most commonly used because it is easily accessible and generally does not require special approval unless specifically required by banks. Banks determine their creditworthiness and, on that basis, determine a current account overdraft known as a current account minus. The interest rate on non-performing loans is typically 7 to 10 percent. If you are in your current account by the end of the minus, you may be interested in borrowing offers.
Non-purpose cash loan
Non-purpose cash loan is paid into the account of the loan seeker and he can use it for any purpose he wants. Depending on their needs, the loan beneficiary can use the money to repair a car, go on a trip, undergo a medical examination that does not cover health insurance, or to overcome problems with minuses or liquidity. The loan is repaid in monthly annuities, and the interest rate varies depending on the length of the repayment plan. The interest rate ranges from 5 to 8 percent, and the repayment period is usually from 10 months to 120 months.
Non-purpose loans are issued in kuna and euro, and may have a constant or variable interest rate. The interest rate is usually fixed over a period of three to five years, while the choice of currencies depends solely on the wishes and needs of the client, ie the borrower.
Lombard non-purpose loan
Lombard non-purpose loan is a cash loan that is made on the basis of a deposit that is used to secure the repayment of the loan. Pledges are most commonly savings – investment products such as housing savings, life insurance policies, term savings, securities and investments in money funds. This type of loan allows you to pay off cash while earning returns in the form of interest, value growth or dividends.
The loan amount is generally less than the market value of the pledge itself. However, the biggest advantage of such loans is that the borrower remains the owner of the pledge, of course, unless the loan is repaid under the agreed terms. The main advantage of a Lombard loan is that no guarantors or additional insurance are needed, but saving is a kind of loan guarantee.
Mortgage non-purpose loan
Mortgage Non-Purpose Loan, as its name implies, has a mortgage on real estate as the subject of the security. In the event of non-repayment of the loan, the bank or lender may collect its claim by selling the property.
The loan repayment period is usually from 1 to 15 years. Mortgage loans are most commonly approved at 50 to 70 percent of the appraised value of real estate. On average, interest rates are lower than those of cash and Lombard loans.