A Brief Guide to Choosing a Loan Type

Browsing for a loan can become a tedious task because there are so many factors to take into account. Starting with the search for the best lender and type of loan and ending with the most affordable interest rate and repayment period, the sheer number of things to consider can oftentimes be stupefying. Here’s a brief guide to the most common types of loans that will help you choose the loan that will suit your needs.

1. Personal Loans

Personal loans allow the borrower to get money for a lot of purposes, including covering the cost of home renovations, emergencies, weddings, paying off debt, and so on. Depending on the lender, personal loans can be either secured or unsecured, with repayment times varying from one to seven years.

2. Payday Loans

Payday loans are one of the most common loans for people who live from salary to salary. They are frequently described as predatory, as they offer exceedingly high interest rates and can perpetuate a cycle of debt. The greatest advantage of payday loans is that they don’t require a high credit score and can be useful when you need fast money.

Whether you are looking for a lender on the Internet, checking out apps like the this loan app, or going to your local bank, be sure to always check the terms and conditions and ask for additional details when necessary.

3. Mortgage

According to Pew’s survey, more than 60% of American adults took out a loan to purchase a home, making mortgages one of the most common types of loans. With the repayment terms between 15 and 30 years, the cost of the mortgage will be determined by a variety of factors, including the type of lender (private or governmental), whether the interests are fixed-rate or variable-rate, etc. When considering a mortgage, take into consideration that the physical asset itself serves as collateral for the loan, so the creditor can confiscate the property if you stop repaying the debt.

4. Auto Loans

Auto loans are a type of loan that allows you to purchase a vehicle. These loans are usually secured by your new vehicle as collateral, although some lenders offer unsecured loans that require a high credit score. The repayment period depends on the lender and can vary from one to a couple of years.

5. Student Loans

Student loans are used by students and their families to pay for post-secondary education and additional expenses, like accommodation, tuition, and supplies. With up to 20 years of repayment time, these loans can be divided into two broad categories: federal and private student loans. Federal loans are funded by the government, while private student loans are offered by private lenders.

Banks and private lenders offer a wide variety of loans that can suit your current needs. Depending on the lender, the interest rate and repayment time will vary, so it is important to read the terms and conditions and pay close attention to detail.