Loan contracts are available in all types of forms with terms that vary. They range from simple promissory notes between family members and friends to loans that are more complex like student, payday, auto, and mortgage loans.
Credit unions, banks, and other lenders lend people money for those significant and necessary things like homes, student loans, and vehicles. Other loans, such as small business loans, and those that originate from the Department of Veterans Affairs, will only be available to specific groups of people.
If you need funds for essential items to make your life a bit more manageable, it’s always a good thing to be familiar with the kinds of loans that you might qualify for and the type of terms to expect.
Small Business Loans
A small loan for business purposes is for entrepreneurs and those aspiring to be entrepreneurs to assist them with starting or expanding a business. The best source for this type of loan is the SBA, or Small Business Administration because they offer a variety of loan options that depend on the needs of the business.
Personal Loans
These can be used for any sort of personal expense, and they don’t need to have a specific purpose. This makes a personal loan attractive for people who might have outstanding debts, or who are looking to reduce the interest they pay by transferring balances. Just as with other loans, personal loans and the terms offered do depend on your personal credit history.
Debt Consolidation
Consolidation loans are meant to make your finances simpler. Put simply, a debt consolidation loan will pay off your outstanding debts, especially debt from credit cards. It means that you’ll have fewer payments due each month and lower interest rates. This type of loan typically comes in the form of a personal or mortgage loan.
Student Loans
These are loans offered to college students and their parents to assist with covering the exorbitant cost of higher education. There are basically two types – private and federal loans. The federally funded option is the better option because typically they’ll have lower interest rates and repayment terms that are borrower-friendly.
Mortgages
These are loans given by banks that allow the borrower to purchase a home that they aren’t able to pay for up front. A mortgage is a loan that’s tied to your home, which means if you can’t pay, you’ll be foreclosed on. When it comes to interest rates, this type of loan has the lowest ones.
Whenever you make the decision to borrow a bit of money, whether it’s just to pay your bills or if you want to purchase a car or home, you need to ensure that you fully understand the agreement. You should know the type of loan you’re getting and whether or not it’ll be tied to things you own.
Additionally, make sure you’re familiar with the repayment terms, what you’ll have to pay each month, and how long you have to repay it.