If you are in need of a loan then definitely you would like to know more about the different types of loans available to you.
You would like to apply for a loan and get approval very soon. You would want your loan process to be a peace of cake as well.
In this article, we are going to explain to you about different types of loans that you may avail yourself of.
There are many types of loans that you can apply such as Personal Loans, Home-Equity Loans, Credit Card Cash Advances, Credit Cards, Small Business Loans and others.
You need to understand how each of these types of loans work. If you have complete information on the loan application process then you will be able to apply for any type of loan and get approval as well pretty soon.
Different Types of Loans
Before we proceed further and learn more about various types of loans that are available for you to apply, let us make a few things very clear.
Not all these types of loan may be available in all the states of the USA. you may find some loan agencies who are willing to provide only one or two types of loans.
There are agencies that provide specific loan-related services. For instance, some companies provide only car loans, whereas some companies provide only payday loans.
Before you take loan services from any loan company or lender, make sure they are cetirid to do business.
If they are not certified then you shall not take the services from them.
Let us explore different types of loans or loan options that you may have.
One of the most commonest types of loan that most people apply for is Personal Loan.
There are various banks, loan agencies, online lenders that provide personal loans to borrowers across the USA.
Borrowed money can be used for various purposes. To manage day-to-day expenses or to buy anything such as a smart TV or a mobile phone.
This can be one of the most expensive ways of getting the money. Often, the amount of personal loans that you want may not be easy to get. You may want an amount that is more than $5000. But, depending upon your current credit score, you will receive the loan. Most of the loan agencies take a lot of time to issue personal loans. They want to verify your information. They want to understand how caale you are to pay back the loan amount.
What is the common repayment period applicable to personal loans?
The repayment period orthe personal loans may from a few months to a few years.
Here, the borrower doesn’t put up collateral.
As in other types of loans, borrowers will have to put collateral that will naturally be seized in case of default. For instance, if you take a car loan, and do not pay the loan amount, your car will be seized by the loan agency. Of course, within the given term period if you repay the loan, you will become the owner of the car.
Credit Cards: Do you know your credit card is a type of loan too?
Whenever you purchase anything with your credit card, you actually take the loan from your credit card issuer. If the bank has issued the credit card to you and you are using it for the purpose of shopping, then it is your bank that is paying on behalf of you. You will have to pay to your bank as needed to continue using your credit card.
When the debt is unpaid, you will have to pay the interest. You will have to continue paying interest until the outstanding amount is paid off.
It may not be an exaggeration to say but the majority of the USA people use credit cards for their shopping or to pay bills, etc (There are more number of credit card holders in the USA than any other country).
There is a big difference between personal loan and a credit card. Your credit card represents revolving debt. There will be a time period. If you pay the amount within the time period, you will pay no interest.
Of course, credit cards are extremely useful. But, if only if they are used in the right way.
If you own a house, then you can borrow the loan against the equity. You can borrow the amount as per the value of your house.
Let us say, half of the mortgage is paid off. You will have the option to borrow half of the value of your house.
There can be low rates. The risk can be bigger. One of the biggest advantages of the home-equity loan is that you will not have to pay big interest rates. It is going to be low for sure.
But, one of the biggest potential downsides of applying for the home-equity is that the house is the collateral for the loan.
If you are the borrower and if you do not manage to pay back then you may have to forego your house. Yes, you will lose it in case of default on the loan. The proceeds of a home equity loan may have various purposes. But, often, the amount of money obtained is used for the purpose of upgrading the house or expanding the house.
Want to start your business? Well, if you do not have funds then it is time that you apply for the business loans. It is easy to get a business loan in the USA if you approach the right lenders. There are many lending agencies that show great interest in supporting startups or new businesses.
Other Types of Loans
There are various other types of loans sucha car loan, payday loans, etc.
before you apply for any loan, it makes sense that you learn more about it first. When you complete information about it, you can apply for the loan. Do not just take decisions without sound knowledge. Know about the pros and cons of the loans that you take.