Loans can come in all shapes and sizes (figuratively speaking) from a simple promise between two friends to more complex ones like mortgage, students, car loans, etc.
Loans usually vary for the specific purpose they are intended for. Key variables can be the length of time, the interest rate, payment rates, and a whole other number of variables.
In this article, we are going to briefly discuss all the types of loans that exist for you to take.
• Debt Consolidation Loans
Debt Consolidation Loans usually come in the form of second mortgages and personal loans. Their purpose is to cover an existing debt, usually credit card debt. These loans generally have lower interest rates, fewer monthly payments and they are designed to aid your financial situation.
• Student Loans
Education in the United States is one of the most expensive in the entire world. This is why student loans exist. They are offered to college students and their families to help cover the expenses of getting a college education. Two main types of student loans exist federal and private student loans. From these two, opting for a federal loan can be considered a smarter financial move, mainly because they come with fewer interest rates and friendlier repayment terms.
• Mortgage Loans
Few people have money upfront to pay for a new home, and this is where mortgage loans come into play. They are issued by banks and are designed to help families buy homes if they cannot pay upfront, or don’t have the money. Out of all the loans that exist, mortgage loans have the lowest interest rates.
• Hard Money Loans
Hard Money Loans invest in people rather than settling a credit card debt. A hard money lender can give you a loan up to 90% of your LTV, with absolutely no issues. They are considered as privately funded loans, and rates can be considered higher. Hard money loans are easier to fund, and you can even agree with the lender about the repayment terms.
• Auto Loans
Auto loans work the same way as mortgage loans, meaning they are closely tied to your property. Auto loans will help you buy a car if you lack the money, or if you are not prepared to pay upfront. One downside is that you risk losing your car if you fail to repay in time. They can be considered quite expensive since the interest rates are higher than most types of loans.
• Small Business Loans
Small business loans will help you start your business and are issued to entrepreneurs. Small Business loans are bet issued by the U.S. Small Business Administration (SBA) and offer different terms depending on the business. For business loans in Canada, you can check at Smarter Loans.
• PayDay Loans
Payday loans are types of loans that are issued in the case of emergency. Since most American households live paycheck to paycheck, the need for emergency funds is quite frequent. This can be an emergency, from needing money to pay the doctors bill, to solving a parking ticket. The government strongly advises avoiding payday loans since the interest fees can be very high, some up to 30%. Most of the time you can encounter extra fees and failing to repay the loan can result in losing some of your property.