When you think about people taking out loans, student loans might be one of the first types of loans that come to mind. After all, about 70% of college graduates have to pay back loans after leaving school.
But student loans are obviously just one of the many types of loans that are out there. You can go through the process of getting a loan to obtain money for almost any reason these days.
If you’re not familiar with all the different types of loans that are available to those who need to borrow money, you should change that today. You could change your financial future by applying for affordable loans.
Find out about a few of the most common types of loans that are available right now below.
Personal Loans
In recent years, personal loans have turned into the most popular types of loans on the planet. They can be used for almost anything under the sun, including:
- Making emergency car repairs
- Paying off medical bills
- Consolidating various forms of debt
- Tackling home improvement projects
- Paying for fertility treatments
Surveys have shown that about 20% of people take out a personal loan each year, and it’s not hard to see why. They’re very versatile and can be used in so many different ways.
Payday Loans
Payday loans are technically personal loans. But they deserve their own category since a payday loan operates a little bit differently than the average personal loan does.
A payday loan is designed to provide a person with the money that they might need prior to their next paycheck. They’re thought of as short-term loans and are paid back within just a few weeks.
One downside of payday loans is that they often come with high-interest rates attached, which is why they’re not always a smart loan option. But they’re worth considering if you find yourself in a bind and need money fast in between pay periods.
Auto Loans
The average cost of a new car these days can run anywhere from $20,000 to all the way up over the $50,000 mark. It’s more than most people can afford to pay in one shot.
With this in mind, many lenders are more than happy to provide people with auto loans when they go to buy a car. As long as a person has decent credit, they can qualify for an auto loan and borrow tens of thousands of dollars if they want.
Auto loans make it possible for those who don’t have tons of money stashed away in their savings accounts to be able to afford a new car that they love. People can also take out auto loans for used cars nowadays if they so choose.
Mortgage Loans
If people can’t afford to pay what it costs to buy a car in most cases, then you know that they can’t afford to pay for a new home outright. And with the average price of a home topping the $200,000 mark in recent years, it’s hard to blame them for struggling to do it.
Fortunately, there are mortgage loans that people can take out to buy homes and then pay for them over time. These loans have made homeownership possible for millions of Americans over the years.
If you’re in the market for a new home and need to take out a loan to buy it, you can go with a traditional mortgage loan if you want. But you may also want to see if you might qualify for something like a VA loan as well. Read this article entitled “VA Home Loan: A Great Advantage For Veterans” to find out how these types of loans work.
Home Equity Loans
If you already own a home and have built up some equity in it, you might be able to use that equity to your advantage. Those with equity in their homes can look into getting what’s called a home equity loan.
People use home equity loans for all kinds of things. More often than not, they utilize them to make home improvements that add value to their properties. But you can also use home equity loans for just about anything else that you can think of.
You’ve earned the equity that you’ve built up in your home. So why not use it to make your life better?
Credit Builder Loans
For people with little to no credit to their name, it can be challenging trying to build up a credit history. This can prevent people from qualifying for many of the loans that we’ve discussed here thus far.
It’s why many people, including a lot of younger people, try to take out what are known as credit builder loans. These loans are on the smaller side and give people a chance to show that they can be responsible with credit.
Over a short period of time, those who take out credit builder loans can create a credit history and put themselves into a position to apply for other loans down the line.
Business Loans
Starting up a small business costs a lot more money than you might think. As a result, the U.S. Small Business Administration hands out business loans to those who need them to get a small business off the ground.
There are other ways to raise the necessary capital to start a small business. But a business loan is often the best way to go for those who don’t have any other good options.
Which Types of Loans Would Be Right for You?
There are pros and cons that come along with all of the different types of loans we’ve talked about today. You should find out about them prior to applying for a loan.
You should also have a clear-cut plan in place for paying back a loan prior to applying for it. It’ll help you steer clear of taking out a loan and not being able to pay for it later.
Discover more about loans and how they could help you by browsing through the other articles on our blog.
