Several types of loans help improve your career, and give you access to assets, and other opportunities.
These loans cover different needs and debt types. Whether you need money for your business, to attend college, or purchase your first home, below are what you must know about the types of loans.
Payday loans are short-term loans but they are usually high-interest and are expected to be paid on your next payday or paycheck. When in need of express loans, you can consider this. However, you must note that you need to show your proof of income which you can get from your employer. When this proof is shown, you will be lent a portion of the money and must be paid back within a specific period which is usually 30 days or less.
Individuals who own a car can consider taking a car title loan when in need of cash. This loan also allows you to borrow about 25% to 50% of your car’s total value. According to the Federal Trade Commission, title loans can range from $100 to $5,500, and the loan must be paid in about two weeks to 30 days. Failure to repay the loans means a repossession of the car. Title loans usually have a high annual percentage rate in triple digits. When your loan is approved, you must give up your car title till you can pay back the total amount of loan borrowed including the fees.
Home Equity Loans
In a home equity loan, you can use your home as collateral to borrow money. Usually, the amount you can borrow is based on your home’s equity or the difference between how much you owe on your home and your home’s market value. The threshold for borrowing is 85% of your home’s equity.
Personal loans are usually used for anything of your choice. They are usually in the form of credit unions, online lenders, or banks and have a fixed minimum monthly payment and fixed annual percentage rate (APR). Certain lenders charge additional fees for personal loans such as origination fees; a single administrative fee paid when a loan is opened.
Personal loans can also be unsecured loans, so you don’t require collateral for application. All you need is a good and consistent credit history and a solid credit score. However, some lenders provide secured loans if you want a lower rate or have bad credit.
Mortgage loans are usually the largest amount of money anyone can borrow in their lifetime. It allows you to buy a home or even build equity. There are several types of mortgage loans like Federal Housing Administration or VA loans. Every type of mortgage loan is dependent on your income and background. Usually, mortgage loans range from 15 to 30 years long. However, you can find shorter and longer terms.
These loans come in either variable or fixed interest rates. Mortgage loans are secured loans. This means that when you purchase a home with a mortgage loan, it can serve as collateral when repaid. If you can pay back your mortgage, you can lose your home in the process.
Irrespective of the loan you require, you must note that a good credit score is essential. It boosts your chance of getting your loans approved with favorable interest rates. Before you opt for a loan, check your credit score and credit report. This tells you where you stand.
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