Loans come in various shapes and sizes, ranging from quite simple loans between friends or family members to more complex ones like auto, payday, and student loans. Banks, credit unions, and other people borrow money for important items, like a car, home, or student loans. Other loans, such as small business loans and the ones from the Department of Veterans Affairs, are only available for specific groups of people.
Regardless of the type of the loan, each one is governed by the state and federal guidelines in order to protect the consumer from bad practices like the excessive interest rate. Additionally, the length of the loan and the default terms need to be detailed in order to avoid confusion and possible legal action. If you are in need of money for an important thing or to make your life more manageable, it is good if you learn what types of loans can be available for you. Let’s take a look:
Contents
1. Student Loans
Source: Simple
As the name states, student loans are offered to college students and their families in order for them to cover the cost of going to college. There are two types of student loans – federal student loans and private student loans. Federally funded loans are better since they usually come with a lower interest rate and are generally more borrower-friendly when it comes to the repayment terms.
2. Personal Loans
Personal loans can be used for any expenses that you have and they do not have to have a specific purpose. This makes them a good option for people with outstanding debts, like credit card debt, who wish to reduce the interest rates by transferring balances. Like other loans, the terms of this loan will depend on your credit history.
3. Small Business Loans
Source: Early To Rise
Small business loans are given to people who aspire to start or expand their business. According to the experts from Slick Cash Loan, the best source of these loans is the US Small Business Administration or SBA for short. It offers a wide range of options which will depend on the business needs the borrowers to have.
4. Payday Loans
Payday Loans are short-term loans with a high-interest made to bridge the gap from one pay to the next. It is usually used by repeat borrowers who live paycheck to paycheck. Once you take out this loan, you will need to return it once you get your next paycheck.
5. Auto Loans
Source: Consumer Reports
Auto loans are tied to your property and they can help you purchase a car, however, you are at risk of losing the vehicle if you miss one or more payments. This type of loan can be given by a car dealership or by a bank, however, while the loans at a car dealership is more convenient, they can have a higher interest rate and will cost you more at the end. Hence, if you are looking for an auto loan, it is better to get it at a bank.
Conclusion
Whenever you decide to get a loan – whether it is to buy a house or car, or simply pay your bills – make sure that you understand and read the contract fully. Know what loan you are getting, as well as if it will be tied to any of your belongings. Keep in mind that you should familiarize yourself with the repayment terms, such as what your monthly obligation will be, how long do you have to pay the loan back, as well as what the consequences are if you miss a payment. If any part of the contract is not clear to you, do not be afraid to ask for adjustments or clarifications.
