There are different types of loans available to people seeking financial assistance. The loans can be categorized based on various criteria and factors. One way of categorizing loans is based on their duration. Based on this classification criteria there are short term, medium term loans and long term loans. Short term loans have a brief maturity date usually ranging from a couple of days, weeks or months. Short terms loans are loans that have to be paid within one year. Medium term loans last for about one to five years, while long term loans such as mortgages last for above five years.
Loans can also be categorized based on the presence or absence of security or collateral. Based on these criteria here are secured and unsecured loans. Secured loans require that a form of security is needed. Secure loans are less risky for lenders as they can always fall back to the security if the borrower fails to pay. Secured loans are thus cheaper. However, a lot of people lack the required security to access loans when they need it. They usually have to fall back to unsecured loans that do not require any form of collateral or security. Unsecured loans are however more expensive as they pose expose the lender to more risks of default.