There are many different types of loans and methods of borrowing money. Which loan is best for you will depend on your circumstances and your personal finances as well as what you need the money for. The following is an overview of many of the most popular loans that are available, and how they may benefit you.
Equity Loans
This type of loan is based on the equity in your home. Equity is simply the amount your house is worth minus the amount you’re still have left to pay your mortgage. Because the security for this loan is the equity in your house, they often have the lowest interest rates. Sometimes homeowners like to get this type of loan to fix up their house. In this case, the loan can be an investment. Others like to tap into the equity in their home to take a long vacation, visiting sites throughout the world. One thing to keep in mind is that you don’t need to borrow against all of the equity in your home. You can take a smaller loan out as well.
Car and truck loans
These types of loans are obviously for a vehicle. New car loans are usually financed for a longer period of time than used car loans. Interest rates depend upon your credit rating, and your monthly payments will be partly determined by them. However, how much money you place on a down payment will affect the total amount financed, and this will be a factor too.
Student loans
These loans are provided by private sector lenders but are backed by the federal government. You don’t have to pay them back until after you graduate. The idea, of course, is that you will be making a good salary after college and will be able to pay them back. It doesn’t always work out this way, so there is one important factor to consider. No matter how bad your financial situation gets after college, these loans cannot be wiped away by a bankruptcy. You will have to pay them back
Debt consolidation loans
These loans are for the purpose of taking all of your debt, usually, credit cards and other unsecured debt, paying it off, and then having a single loan payment to make each month. Not only is it easier to make a single debt payment, but the amount you need to pay each month is usually less than all of your current monthly obligations. In addition, these loans are closed in. This means that a specific number of payments need to be made, and the loan is paid off. After this, you are debt free. You usually need to have a certain minimum credit rating, and sometimes they want a certain amount of collateral. There may be other restrictions as well.
Personal loans
There are many variations on what is called a personal loan, but commonly, they are loans that are financed for six months to a couple of years. The collateral requirements may be something as general as your household goods. The interest rates can be higher than other types of loans, but this depends upon the type of collateral that is offered for the loan.
Title loans
Like personal loans, title loans are installment loans. They get their name because the security for the loan is the title to your car. If you don’t have a lot of assets as collateral but you own a car, this can be a great loan. You will be able to pay back the loan in installments and enjoy fairly low-interest rates. The best part of all this is you will be able to drive your car away after getting the money. It is only your title that is held by the lender.
Payday loans
Also known as quick cash or fast cash loans, these loans serve as an advance on your next paycheck. They are only for a period of two to four weeks. They are also paid back in a single payment that is the principal plus the lending fee. This type of loan is perfect if you need cash today, and you would otherwise have plenty of money if today was your payday.
How much money you qualify for will depend upon the type of loan you are looking for, your income, the value of your collateral and in most cases, your credit rating. A good place to start shopping for a loan is at an online site that can provide a quick quote such as Loan Connect.
