If you need to borrow money, look no further.
There are a variety of reasons why people need to borrow money. Most people get a loan when they need help making a large purchase, such as a home or car. However, paying thousands of dollars for something is difficult for most people.
Depending on your situation, there are several loans that you can use to help you. Whether you’re trying to pay for school or remodel your home, you’ll be able to borrow money, but what types of loans are there?
Read on to learn everything you need to know about the several types of consumer loans.
1. Mortgage
A mortgage is a type of loan specifically designed for the purchasing of real estate.
Whenever a homeowner wants to buy a house but can’t afford to buy it at once, they’ll speak with a bank to see if they’ll loan them money.
When the bank gives someone a mortgage, they’re essentially using the house as collateral. Should the borrower not make payments towards the mortgage, the bank will collect the home and resell it to make their money back.
2. Home Equity Loan
A home equity loan is used by those that already have the money paid towards their home or own it in full.
This type of loan allows homeowners to borrow money up to the amount of equity that they own.
For example, if your home is valued at $400,000 and you’ve paid off $200,000, you can expect to borrow anywhere from $80-90,000. Homeowners typically use home equity loans when they remodel their homes, but the funds an be used for anything.
3. Credit Card
A credit card is a traditional way of borrowing money that most people use.
Credit cards provide what’s known as revolving credit, meaning you can continue borrowing money. However, you have to pay the debt off if you’d like to keep using it.
All credit cards have various lines of credit, which are the maximum amount of money that can be borrowed. If a user borrows the max amount, they’ll be unable to make further purchases. Credit cards usually have a minimum monthly balance that users can pay off, preventing them from having to repay all at once.
4. Auto Loan
Auto loans are similar to mortgages in that they’re designed for a specific purpose, but these are for cars instead of real estate.
Either a bank or dealership will loan the borrower money and use the car as collateral.
When it comes to auto loans, they typically have high interest rates and short payment periods. If you were to get a new $40,000 car, you’d end up having to pay about $580 each month over 6 years, which is an extra $2k because of interest.
5. Student Loan
Student loans are used strictly for education, although many people take them out for other purposes.
These can be acquired either from the government or a private lending institution. To get one, you have to prove that you’re enrolled in a college and are in financial need.
If you wanted to get a student loan from the government, you have to fill out the FAFSA, a form in which you provide your financial information and dependency status. Loans from private lenders don’t require this, but they typically require borrowers to get a co-signer.
6. Personal Loan
A personal loan is a loan that most people get whenever they apply for a loan at a bank.
These loans can be acquired at most banks and lending institutions, making them accessible for many people.
Unlike most loans, personal loans do not provide the lender with collateral. This means that they often add high interest rates to their loans to compensate. If you fail to make payments, there’s nothing for them to collect, but they’ll take you to court depending on how much you owe.
Using Loans to Get Quick Cash
Now that we’ve gone over several consumer loan types, we should discuss the best types of loan options you should go for if you need quick cash.
You’ll be unable to get money quickly if you’re trying to get a mortgage or car loan.
Student loans will also be difficult to get because they have a lengthy application process. If you’re trying to get a loan strictly for personal use, personal loans and credit cards are the best way to go.
These loan types aren’t designed for a specific cause other than to provide you with cash. Keep in mind that using either of these options will require you to pay off the interest. Your credit will also play a part in determining what kind of loan you can get.
If you’d like, you can contact us about getting a short-term loan. This is a personal loan that’s meant to be paid within a year. However, we’ll work with you to come up with a reasonable plan that allows you to get money without having to break the bank over time.
Determine Which Types of Consumer Loans Are for You
Depending on your needs, there is a loan that will help you with your situation.
You’ll need to look at the various types of consumer loans to decide which one makes sense in your case. For example, you should try to get a student loan if you need assistance paying for school.
Some of the most common loan types are personal loans and credit cards. There are also mortgage and auto loans if you’d like to purchase a home or vehicle. If you already own a house, you can take out a home equity loan up to the amount that your home is valued.
To learn more about getting a loan, go ahead and claim your cash with us at Captain Cash.
