Financial Facts: Comparing 4 Types of Loans
Saturday, January 28, 2017, 6:00 AM | Leave Comment
Going to college or buying a home can be a worthwhile investment in yourself or your family.
However, you may not necessarily have tens of thousands of dollars in the bank to pay for school or buy the house outright.
Therefore, it may be necessary to take out a loan to cover those expenses.
Let’s take a look at a few common loan types, how they can help and issues to consider before accepting money from a particular lender.
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Auto Loans
It will be extremely difficult to get to work or school each day if you don’t have a car.
Therefore, it may be in your best interest to look into a car loan that will allow you to buy a safe, affordable and reliable automobile.
As an auto loan is a secured loan, interest rates tend to be below 5 percent for those with good or average credit.
If you are in the market for your first vehicle, you may want or need to make a down payment in cash.
In some cases, a lender may require that you make a down payment as a condition of getting the loan.
Typically, you trade in your current vehicle, and the value of that vehicle is used to calculate your down payment. Since you have nothing to trade, you will need to bring cash or check to the dealership.
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Student Loans
Student loans are technically an unsecured loan, but most students who have just graduated from high school will need a cosigner.
In most cases, these loans cannot be discharged in bankruptcy. However, student loans come at relatively low interest rates, which makes them easier to repay.
Furthermore, borrowers have many ways to delay payments or create alternate repayment terms with lenders in the event that they are having trouble staying current on their loans.
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Mortgage Loans
The typical mortgage is repaid over a period of 30 years. Interest rates today are close to 4 percent, but they can either rise or fall based on market conditions.
It is not uncommon for borrowers to refinance a mortgage to either lower interest rates or to cash out equity that they have built in the property.
Ideally, borrowers will look for loans that don’t have a repayment penalty as they can make refinancing impossible.
A mortgage is considered to be a secured loan using the house as collateral, and it can be foreclosed on by a lender after a single missed payment.
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Payday Loans
It is always a good idea to create an emergency fund that can be used when the water heater dies or the car won’t start.
However, if you don’t have such a fund, a payday lender may be able to meet your short-term financial needs.
You can get payday loans in Dallas, TX, and pretty much any other major city in the United States.
In a matter of hours, you can get $1,000 or more in your bank account to help you pay for those emergency repairs.
The major downside to a payday loan is the amount of interest that you may be charged for the right to borrow without a credit check.
However, you can keep loan costs in check by repaying the money as soon as possible and only borrowing what you need.
Whether you need $1,000, $10,000 or $100,000, there are loan products available to meet your needs. Depending on your credit score and income, it may be possible to borrow without the need for collateral or a cosigner. This makes it easier to get the cash that you need to accomplish your goals or provide for your family.
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