A direct loan is a purpose loan that can only be used for a particular item (e.g. purchasing real estate, reconstruction, etc.). In addition to standard conditions, such as the interest rate, loan term and debt maturity, such loans must necessarily be spent for specific purposes.
What can direct loans be used for?
Direct loans are one of the most common loan types. These include:
- loans secured by real estate and for its purchase;
- car loans;
- personal loans (for the purchase of household appliances, furniture, repairs, etc.);
- loans to pay for medical services;
- student loans;
- holiday loans.
As a rule, direct loans are non-cash. Funds from the bank account are transferred directly to the seller’s account, bypassing the stage of the borrower’s current account. In addition, a number of direct loans are provided against the security of purchased goods or real estate.
Direct loans are a type of mutually beneficial cooperation between lenders and sellers of goods and services. Thus, real estate developers often enter into agreements with a particular lender to simplify the terms of lending to potential buyers of houses or apartments. The same applies to car dealers who, together with lenders, develop lending schemes for the purchase of cars. Lenders strive to make direct loans as convenient and affordable as possible, therefore, representatives of lenders are often present in retail outlets where you can apply for a loan right on the spot or even immediately get the desired loan. Depending on the purpose and loan amount, customers will need to provide several documents (sometimes only an SSN) or lots of documents, a surety, and collateral.
Direct loans: advantages and disadvantages
Direct loans have several advantages:
- Low interest rate;
- High chance of approval;
- Transparent fees;
- Fast funding.
However, they have significant disadvantages:
- Down payment may be required;
- Additional services and commissions are often imposed – for example, insurance;
- Early loan repayment may be prohibited or limited.
California Payday Loans Online will help you get the most affordable direct loan in the shortest possible time.