Business and Economy

Types of credits

What is credit?

Credit is the trust that allows one party to provide money to another party wherein the second party does not refund the first party immediately but promises either to return those resources at a later date. There are basically two types of credit, Trade credit, and consumer credit. Some other types are explained below:

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Types of credit

Some of the credits that exist are:

Consumer: This is a sum of money that an individual from the bank or any financial entity receives to pay for some goods or services. Generally, these credits are paid in the short and medium-term, that is, in less than four years.

Mortgage: this is a sum of money that an individual receives from the bank or financial institution to buy land, property or to pay for the construction of some real estate. These credits are delivered with the mortgage on the property itself as collateral. Mortgage loans are usually paid in the medium or long term, that is, between the ages of 8 and 40.

Commercial: this is a credit that the bank or financial entity gives to a company so that it can satisfy its needs related to the purchase of goods, working capital, for the payment of services or suppliers. These credits are usually paid in the short and medium-term.

Personal: This is a sum of money that the bank or financial entity gives to a natural person, never a legal entity, so that they acquire personal property. These loans are usually paid in the short and medium-term.

Primary: it is a sum of money that a natural person receives from the bank or financial institution. This loan is made so that the person can make the purchase of a good. This must be approved by the bank or financial entity and will remain with a pledge until the debt is paid in full.

Automotive: this is a sum of money received by a company or person to finance the purchase of a car, whether new or used.

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