Are you in need of an equipment or an essential item for your business? Maybe you want to make your life more manageable and that’s why you need the item to help you achieve that. Whatever the reason, you’re in need but your personal finance at the moment does not allow you to obtain what you want. What should you do? You might want to familiarize yourself with the loan types best available to you according to your situation. The loans you can get the credit advice as soon as possible so you will not get stranded. But how will you know the perfect type of loan that will suit your situation? Keep reading.
- Personal loans
Are you facing some form of financial strain? Maybe you have a debt the needs to be consolidated, or maybe you need some money for your vacation. It could also be the daily expenses that you need some money to boost. You have your reasons different from the ones specified by the loan lenders. And whatever that reason is, a personal loan is a perfect option for you to go for. On the consumer lending market, this is the loan type that is the most versatile.
But not any personal loan is fit for your situation. The loans vary depending on the lender and for this reason, some lenders opt to offer secured loans while others can prefer unsecured loans. Which brings up the issue of the associated interest rates. And for this reason, you should be keen on the type of personal loan to take out. Which is why you need to compare loans so that you will make the best decision. The loans secured by collateral attract lower rates than the unsecured loans as the later are riskier for the lenders to make. If you have some collateral, you will be lucky to have low-interest rate loans.
- Student loans
As a student, you need finances for smooth and efficient running of your student life, studies being a major purpose. But remember you have to feed, clothe, and entertain yourself once in a while. And if your personal finance – the money you get from your parents and sponsors cannot sustain you, you will need to take out a loan. Now, you can either take out a federal student loan or other private companies loans. The federal student loans attract fixed interest rates for all borrowers and you won’t have to worry about re-paying it back while still in school. Repayment will be effected after your graduation. Federal student loans come in two, subsidized and unsubsidized federal student loans. If you’re having highest financial needs, go for the subsidized version. In this version, the government caters for the interest while you’re still in school.
Should you opt for unsubsidized loans, it is automatically assumed that you’re an average student and you’re not experiencing serious financial needs. Meaning, the money you can get is even lower than the previous version. This loan does not take your financial situation into consideration whatsoever. Which is bad if you’re really in need, but if the money you get from your parents and sponsors isn’t that bad, should you need some money to boost it then unsubsidized loans will be the loan to take. Another option to take out the loan is with the private lenders. The interest rates are a bit lower than that of the federal loans but are not fixed. Every financial institution has their own rates for the loans.
- Line-of-credit loans
If you’re a small business owner, then you might want to consider this loan. It’s a permanent loan arrangement that you can have with your financial institution as it will protect your business from stalled cash flow and emergencies. This type of loans is intended for payment of operating costs and inventory purchasing for business cycle needs and working capital. The loan extends the available cash in the checking of your business to the upper limit of the loan contract. Every financial institution has its own funding method but the institution will transfer some amount to your checking business account to cover checks. You will pay interest on the actual advanced amount from its advanced time to the time it’s paid back.
The good thing about this loans is the lowest interest rates they attract owing to its low-risk nature. You will be paying off the principal on monthly basis at your own convenience. Sounds good? Most of this loans are written for periods of 12 months and you can renew it automatically for an annual fee. You are given an ample time to negotiate which is between 7-30 days each contract year. All you have to avail to the financial institution are the projected cash-flow statement, latest tax returns, and the current financial statements.
If you’re in need of a home but you can’t afford to pay for it upfront, taking out a mortgage will be the best option for you. Among all loans, mortgages are in the category of having the lowest interest rates. The mortgage will be tied to your home and therefore means that you risk foreclosure of the home should you default on the payments. If you’re having a good credit score, you will be in a good position to get a better or higher mortgage.
- Interim loans
This loan will fit you if you’re building a new facility for your business where you’ve employed contractors to handle the work and you’re having a mortgage. The contractors will be expecting periodic payments as they continue with the work. This is where the loan will come in handy. You will use the loan for making the periodic payments. And how will you pay back the loan? Simple, the mortgage on the building will cater for the payback of the interim loan. Who will pay off the loan is the main concern of the financial institution prior to assigning the loan. And for your case, the mortgage for the building has got your back.
- Small Business Loans
Being an entrepreneur or an aspiring entrepreneur, you need capital to start or expand your business. Now, when your personal finance cannot provide the minimum capital for the business, you will need some support. And that’s where small business loans set in. Small Business Administration (SBA) is your best source with various options depending on the needs of your business. Don’t hesitate to check it out.
- Secured and Unsecured loans
If you’re starting a new business and you have some kind of collateral, whether inventory or real estate, you will comfortably qualify for a secured loan. And you know what’s interesting about secured loans? They attract low rates of interest. Especially if you’re in need of a loan written for more than a year, say, to buy equipment, you will need to provide some collateral prior to being credited the loan.
And maybe you’ve been running your business for a while now and you’re in need of a loan. If you convince the lender that your business is sound and assure them of timely repayment, you will probably make them write an unsecured loan with no collateral pledged just in case you fail to repay the loan. It will be much easier when you’re having a track record of success and profitability.
- Auto loans
Are you in need of a car and your personal finance is not enough to get one for yourself? Don’t worry, an Auto loan is here for your rescue. Just approach any financial institution next to you and they will help you afford a vehicle that suits your interests. The loan will be tied to that vehicle or any property that you borrowed the loan to obtain such that should you default, you will risk losing the property. Distribution of this loan can be either via the bank or directly from vehicle dealership. Which option is better for you? Find out just now. Taking out the loan directly from the dealership carry very high-interest rates even though they’re more convenient. The overall costs will have become higher and probably you won’t want to go with this. So, prefer having the loan distributed by the bank to maximize the savings.
- Conventional loans
This kind of loan will fit you if you’re in need of buying a home for yourself. Conventional loans offer great rates and you will be given many options for down payments with, of course, flexible terms. And the good thing for you is that a good number of financial institutions – mortgage companies, credit unions, and banks offer these loans. You may be wondering about other advantages of taking out this loan, right? Well, quite a number actually. Talk about its availability for investment property, second home, or the home you’ll live in. It also offers adjustable and fixed rates depending on the length of the loan period which goes up to 30 years. You will get a chance of down payments as low as 3% with no monthly mortgage or upfront insurance for 20% or more down payment. This loan is better than FHA loans in that you can cancel the mortgage insurance with home equity of 20%.
Sometimes you might be needing some money for your business, home, studies or project but your personal project cannot satisfy the need. You will need a loan to support or start you off. The loan will help you meet your goals. Now, knowing your loan options when approaching the lending financial institutions will be an added advantage for you. You will be in a good position to make better decisions about the loan types according to your situation. The loan types above will help guide you but there are other types also not mentioned here. There are other relevant blogs where you can find enough information about the loan type that fits your situation.