Types of Cash Loans You Need to Know Before Borrowing
Every bank and financial institution offers different cash loan products. Learn the main types, their requirements, and how they work before you borrow.
When your finances are running low and you need money for business capital, a cash loan can be the right solution. Easy requirements and a relatively fast process make cash loans popular in urgent situations.
Every bank and financial institution sets its own requirements and process for each loan product. So before you choose a loan, you need to know the different types first.
Unsecured Cash Loans
This type is popular because the process is fast and you don't need to pledge any of your assets. Banks issue these loans to their customers, and borrowers must have held a credit card for at least 1 year.
The amount you can borrow is limited to your credit card limit.
Secured Cash Loans
Unlike unsecured cash loans, which don't require collateral, this type requires you to pledge an asset when you apply. Eligible assets include the BPKB (vehicle ownership document) for a car or motorcycle, land certificates, and other important documents. The loan amount is adjusted to the value of the asset you pledge.
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The loan ceiling for this type is clearly higher than an unsecured personal loan (KTA). However, disbursement takes a little longer because the lender must carry out an appraisal, or valuation, of the pledged asset. The loan ceiling is typically 70-80% of the asset's selling value. For example, if your house is worth Rp 300 million, the maximum loan you could get is Rp 210 million to Rp 240 million. The higher the asset's selling value, the higher the loan ceiling you can obtain.
Loans for Business Capital
Kredit Usaha Rakyat (KUR), or People's Business Credit, is a cash loan program initiated by the government. Its purpose is to help micro and medium-sized business owners get the capital they need. The main requirement for a KUR application is attaching a SIUP, or Trading Business License.
Cooperative Loans
The main requirement for a cooperative loan is that you must be a member of the cooperative, because only members can apply for loans from it. The amount you can borrow is also smaller than other loan types, since a cooperative's funds come only from its members' contributions. To apply for a cooperative loan, you need a KTP (national ID card), an NPWP (taxpayer identification number), a payslip or income statement, a family card (kartu keluarga), and an electricity or PDAM (regional water utility) bill as proof of residence.
Whichever cash loan type you choose, weigh your decision carefully and run the numbers first. That way you won't regret it later, and you can repay the installments in full without missing payments along the way.
