Finding a loan can be a bother sometimes… though there may be a large variety of options available, it can be difficult to determine which of the choices available to you will best suit your needs.
One of the best ways to find a good loan that will meet your needs is to shop around, comparing loan rates from different lenders and seeing whether a standard lender such as a bank or finance company is best for you, or if you would do better with a low-interest loan from an online lender.
If you’re new to lending as a whole, however, you might become even more confused by some of the choices that are open to you… to help ease your confusion, here are some of the most popular options that you might meet.
Secured and Unsecured
Most any loan that you get is either going to be secured or uninsured. What this means is that you may be needed to use some form of property that has value to ensure repayment of the loan known as collateral.
A protected loan is one that needs collateral, whereas an unsecured loan does not. The protection offered by collateral also tends to bring lower interest rates as well.
Financing and Mortgage
Mortgages and other financing are a special type of loan… they are secured, but the thing that they are used to buy serves as the collateral. Financing is usually used when buying things that have a high value, such as automobiles and some electronics; a mortgage is a specific type of financing, and is used when purchasing a house or other real estate.
Interest rates and repayment terms can change based upon the amount of money that was paid as a down payment, the total amount borrowed, and the amount of time that the financing covers which may be for as little as one to five years, or as high as thirty.
Homeowner Options
If you already own a home or other piece of real estate or have at least returned a large part of the debt that was used to buy it, you may also have the option open for a homeowner loan.
This type of loan uses the value of your home equity (which is the portion of the home that has been paid for, in comparison to the total value of the home) to offer lower interest lending choices to people who have either good or poor credit.
Many lenders will offer these as a loan option, though online lenders may do so as a way to offer individuals with bad credit interest rates that are competitive with those that many banks reserve for customers with better credit scores.
