Did you know, there are various types of bank credit that can be used to get loans. The credit is divided into several groups with their respective goals and functions, such as conventional credit and Islamic credit.
Loans or bank kredit are often used as an alternative fund when you want to buy a house, start a business, and others. However, before applying for credit, it would be better if you understand in advance the following types of bank credit. Come on,
Types of Credit In General
The types of credits are generally divided into several groups, ranging from usability, purpose, term of time, to collateral. Here is a full explanation of the types of credit in general. Check it out!
Types of Credits According to Interest Rates
When viewed from the interest rate, credit is divided into two, namely conventional credit and Islamic credit.
a) Conventional Credit
Conventional credit is a form of credit commonly encountered in banks or other financial institutions. The following loan system charges interest rates on the part of the debtor. So, the debtor must pay the interest rate. Usually, interest rates are included in regular installments.
b) Islamic Credit
Unlike conventional credit, Islamic credit does not apply an interest system to its debtors. This credit uses a method of revenue sharing or ratio that is in accordance with the agreement. So, the amount of installments per month will remain the same from the beginning to the end of the credit period.
Types of Credit According to Their Uses
The type of credit according to its usefulness is as follows.
a) Micro Credit Enterprises (KUR)
One type of credit according to its usefulness is Micro Credit Enterprises (KUR). This is a type of loan from a government program to help MSMEs (Micro, Small, Medium Enterprises) to obtain capital or business financing.
b) Investment Credit
Investment credits are types of productive credits that are used for investment activities and providing profits. For example, invest by building new factories and projects. Usually, this type takes a long time in order to make a profit.
c) Working Capital Credit
Almost the same as investment credit, working capital credit is usually used to encourage increased production activities of a company. As the name suggests, this credit is a form of financial assistance in building and developing a business.
Types of Credit Based on the Term
According to the payback period, the types of credit are divided into three forms, namely:
a) Short Term Credit
Short-term credit is a type of credit with a maximum repayment period of one year. Generally, the short-term type is intended for working capital.
b) Medium Term Credit
Meanwhile, medium-term credit has a payback period of about one to three years and is usually also intended for working capital purposes.
c) Long-Term Credit
Long-term credit offers a payback period ranging from three to 5 years. Generally, this type of credit serves as an investment, for example to finance a project or also consumptive things.
Types of Credit Based on Purpose
Based on its purpose, the types of bank credit are as follows.
a) Productive Credit
Productive credit is a type of loan intended for production, investment, or business development. That is, productive credit is used in order to produce a good or service, such as Home Ownership Credit (KPR).
b) Consumptive Credit
Conversely, consumptive credit is used for personal purposes, such as buying consumptive furniture. These types of credit are car loans, multipurpose, and others.
Types of Credits By Form
The types of credit according to its form are as follows.
a) Bank Account Credit
Bank account credit is a type of credit that gives the right to the borrower to withdraw funds in his bank account worth the ceiling from the bank. The payment is made when the due date along with daily credit interest.
b) Installment Loan
Installment loan is a form of loan whose principal and interest installments are paid regularly as agreed. In this type, principal installments will continue to increase, while the value of interest decreases. Therefore, the total installments become constant during the loan period.
Types of Credit Based on Collateral
According to the guarantee or collateral provided, the types of credit are divided into two types.
a) Credits with Guarantee/Collateral
There are types of credit that use certain collateral terms, whether it is tangible goods or not. Such collateral serves as a protector of any credit from the bank.
b) Unsecured Credit
Then, there are also types of credit that offer loans without requiring guarantees or collateral. So, you can get the loan without the need to provide any guarantees.
Types of Credit Based on Fund Source
As for the type of credit based on the source of funds, including:
a) Seller Credit
Seller’s credit is a type of loan that the seller gives to the buyer. The goods have been received first, while the payment is made afterwards gradually. Usually, this credit is used in suppliers and distributors.
b) Buyer Credit
Buyer’s credit is a type of loan where payment has been made at the beginning of time, while the goods are received in the future. This method is often used by sellers of imported goods and in pre-order programs.
c) Aksep Credit
Basically, Aksep credit is the most widely used type of loan from the community, which comes from banks. This type is very suitable if you need considerable funds for business or personal activities.
Credit Application Stage
Well, after knowing the types of credit in general above, then how to apply for it? Well, each bank actually has its own stages. However, generally the submission process has several stages such as below.
- Prospective customers apply for credit as well as conducting interviews with bank officers.
- The Bank reviews the validity of credit giving through data collection and assessment, as well as conducting checks in the field.
- Determination of credit decisions where the bank considers the feasibility of lending.
- Credit agreement or signing of an agreement contract.
- Implementation of credit realization.
That’s all the information about the types of credits and explanations that you should know. Each bank certainly has its own terms and conditions in applying for credit, so it is important that you recognize the type of loan before using it. So, which type of credit would you apply for?