Loan contracts come in various forms and conditions. They range from a simple promissory note among friends and family to more complex loans such as auto, payday, mortgage and student loans. Regardless of the type, each loan will be governed by policies and guidelines designed to protect clients against adverse practices such as excessive interest rates. In addition, the term of the loan as well as the default conditions should be clearly detailed in order to avoid any confusion or perhaps possible legal action.
If you need money for a very important item or perhaps to help you make your life more manageable, it is essential that you know all the types of loans that may be available to you depending on the different terms on which you are. Can you wait. .
Different types of loans
There are different types of loans which have a certain intended use. They can vary depending on how long, when payments are due, how interest rates are calculated and a number of other factors.
Mortgages – These are distributed by banks in order to allow consumers to buy homes that they cannot pay in advance. It will be tied to your house. This further means that if you do not pay it, your property will be foreclosed. Unlike any other type of loan, this one has the lowest interest rate.
Student – These are offered to college students and their families to help cover the costs of higher education. Generally, there are 2 main types of student loans – those funded by government and those funded by private lenders. Experts say the first option is better because it comes with much lower interest rates and better repayment terms.
Staff – These can be used for all personal expenses. This option has no specific purpose. It is for this reason that many are drawn to apply for such. The terms of this type of loan will depend greatly on your credit history.
Small business – This is often given to entrepreneurs or aspiring businessmen to help them start or grow their businesses. Small business loan options will greatly depend on the needs of your business.
Auto or Car – It is quite similar with mortgages since it is linked to your property. They will help you pay for a certain car; however, you risk losing the car if you miss payments. Auto or vehicle loans can be offered by a bank or directly by the car dealership. While those offered by the dealer are somewhat convenient, be aware that they generally cost more.