Loans and Loan Types

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Loans and Loan Types
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Loans are used for many reasons

• Feed, seed and fertilizer purchases
• Machinery,livestock,and equipment purchases
• Land ,building,and home purchases
• Business start up expenses like attorney
  fees,incorporation fees, and product development
  costs
• Emergencies

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Short term loans

• Less than 1 year
• Used to buy items like feed, seed, fertilizer,
  and other consumables
• Referred to as an operating note
• Can be financed by merchants, banks and private
  individuals
• Interest generally calculated using simple
  interest method.
• Used to even out highs and low in income and
  expenses

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Intermediate term notes

• 1 to 10 years in duration
• Used to buy depreciable assets like machinery,
  equipment , breeding livestock, and vehicles
• Banks, Individuals, Ford credit, GMAC
• Interest calculated several ways including
  remaining balance and add on

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Long term loan

• Used to purchase land, buildings, homes
• Longer than 10 years in duration
• Usually a mortgage with equal payments
• Provided by commercial banks, Farm credit system,
  individuals, insurance companies, and mortgage
  companies

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Mortgages

• Mortgages are long term loans that are generally
  used to finance the purchase of homes.
• Mortgages are generally offered in 15 and 30 year
  lengths with many options to choose from.