Popular Types of Loans You Can Avail
Are you in need of a loan? Getting one is an excellent option if you want to achieve a financial goal. Many loans range from a few weeks to several years, and before applying for a loan, you need to find the right one for yourself. Some of the factors to consider are your needs, financial capability, and the time needed to pay it back.
Every loan has a different purpose, lender, mode of transaction, allotted time to pay back, and the interest rates that come with it. Loans may vary depending on your location as well. For example, a loan in Birmingham may differ from a loan in New York. Therefore, it is better only to look up the loans that are allowed in your area.
The following are some of the popular loans you can avail, and the lenders that offer them.
Personal loans are well-recommended and offered due to their versatility of usage. In this type of loan, the borrower gets a specific amount of money and pays it back in a set amount of time. Depending on the amount borrowed, the loan can go for a few months to several years. According to a survey, 22% of adult Americans have personal loans.
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What makes personal loans appealing to borrowers is that they can be used for various things, such as to pay bills, debt payments, or other miscellaneous fees. You can also use it to purchase assets, fund vacations, or other events.
With this, personal loans are popular and are offered by almost all types of lenders. These lenders are banks, credit unions, and lending companies, both physical and online.
Debt consolidation is a unique type of loan. Unlike personal loans, debt consolidation loans have a special purpose, and that is to pay off your other existing debts.
How this works is that all your existing loans will turn into one large debt that you need to pay off, plus an interest rate. To be precise, all your debts or loans will be transferred to another lender, so you may pay all of them at the same time, providing you convenience. It may require you to provide your debt information or credit history.
Not only will you have to pay your combined debts or loans, but there is also an interest rate you have to pay. It may depend on what was negotiated with the lender, but like many types of loans, the interest depends on the borrower’s credit score. The better the credit score, the lower your interest rate.
Are you planning to buy a vehicle? If so, there is a type of loan for that. It is called an auto loan, where an individual can finance a specific vehicle. The borrower gets a vehicle of choice and pays monthly a fraction of its total price plus the interest. Auto loans may take a long time, spanning from a few years to about two decades.
Some examples of vehicles that you can finance are cars, boats, and even recreational vehicles (RV). You may either get for yourself a new or a secondhand one. You can avail of auto loans in banks and lending companies.
If you want to borrow the money you need for a short period, you could go for a cash advance loan. Also called payday loans, these loans are categorized as short-term loans as you have to repay the borrowed money in a few weeks or a couple of months, depending on your negotiations with the lender.
What distinguishes cash advance loans from other types of loans is that the money you borrow and the interest rate depend on your income. So it does not need any qualifications, as the lender wants to know that you have a stable income.
It also does not need any collateral, but being unable to pay the debt will affect your credit score. It has a high-interest rate which may cost higher than the borrowed money.
There are several types of loans people can take. One has to select a loan based on their needs to make the most out of it. However, always make sure to pay off the loan on time.