There are many types of loans out there. But these five different types loan should be known by everyone. These loans can be given by banks, credit unions, financial institutions or even private money lenders. Out of these, the private money lending option got better benefits than the other type of loans. So if there is an option; always go for the private one. Let’s see one by one.
These 5 different types of loans are as follows:
- Personal Loans
- Student Loans
- Mortgage Loans
- Auto Loans
- Small Business Loans
Personal Loans:
This type of loan is considered to be one of the most versatile loan in the money lending business. You don’t have to use this loan for one specific reason as the mortgage loans, auto loans, etc. You can use this loan for any of your personal work. You can use the personal loan for day to day expenses, marriage, vacations, property renovations, etc.
You don’t have to specify the reasons for which you want to loan. The term length of personal loans can be wide as their use, but most of the personal loans are for 10 years. The maximum amount given by any financial institution for personal loan can be around $100,000.
They can’t give you a personal loan higher than this amount. Many people also use the personal loan to pay off their credit card debt as well.
Student Loans:
This is another one of the common loans which you can see nowadays. Most of the students who wants to study abroad are not able to afford the expenses. Also, most of the people studying in the same country are not able to afford their college or higher education as well. This is where student loans come in and solves your problem.
Many students apply for students’ loans whether to study in the same country or to study abroad. The rate of interest for the student loan in fixed it doesn’t change as other loans. Also, one of the best parts about this loan is that the loan doesn’t have to be repaid until a few months after your graduation. So, you get some time to earn and save money for the loan repayment.
Mortgage Loan:
This type of loan is basically for purchasing real estate. If you want to buy a family home then you can apply for the mortgage loan in any financial institution. This loan is only used for one purpose i.e. purchasing property or real estate. You can’t use this loan for any other purpose like the personal loan.
If you are not able to pay off the mortgage loan then the bank or the financial institutions will sell off your property which you purchased with the loan and collect your debt with it.
Auto Loan:
Not many people are able to afford an automobile or in simple words, a car. But having an automobile is a necessity nowadays. Many banks and financial institutions provide auto loans which you can use to purchase/buy the automobile of your choice. The period of time for the loan differs from 24 months to 60 months. But if you want a long period of time then it ranges from 72 to 84 months if the amount of loan is high.
But most of the financial institutions don’t allow that, as used car declines their value unlike home value. So, they will not be able to clear the debt by selling the automobile if the borrower is not able to pay off the loan.
Small Business Loans:
If you want to start a local business or any kind of small business then there are loans available for that as well. This loan is mostly for the startup businesses. Many of the small businesses lack enough funds, so they take a loan from the bank to fill all the financial gaps which they are facing.
You can also use this loan for any business expenses as well. If you want to expand your local business then also you can take a small business loan from any financial institutions. But you need have certain credit to your name for you to get a small business loan.
These fives are the different types of loans which you should know.
