What You Should Know About Different Types Of Loans
In the course of one’s lifetime, a person can expect to borrow money at several times. It may be for a major purchase, such as a house or car, or it may be for something smaller like furniture for the home or even to make the monthly financial obligations. Here are several of the most typical loans that one may come across and what to expect from each.
A Mortgage
A mortgage loan is used to finance the purchase of a home. The average person does not have tens or hundreds of thousands of dollars on hand to make the purchase outright. As a result, people will go to financial institutions, banks and credit unions, to help them make the purchase. The typical mortgage loan is based on a 30-year repayment schedule with borrowers making a monthly payment of interest and principal. In the initial years of the loan, the interest payment is higher than the principal payment. Most 30-year loans do not get paid off as homes are either sold or homeowners refinance their loans.
A Car Loan
The same idea holds true when purchasing a car. A buyer does not have the $20,000 or $30,000 with which to make the purchase. A buyer will utilize a bank or credit union, which typically offers loans of two to five years. Car loans are shorter term loans and carry interest rates a little higher than a mortgage loan.
Student Loan
Student loans help college students meet the increasing costs of attending school. With tuition on the rise, a college student can utilize one of many different loan programs to help pay for school. A student loan is not required to be paid back until he or she finishes school. Typically, student loans are paid back on a 10-year schedule. Many will consolidate their student loans into other repayment options.
Auto Title Loans
While there are many loans for major purchases such as cars, homes, and an education, there are also shorter term, lower dollar amount loans available for those that need small amounts of money immediately. Embassy Loans, for example, offers auto title loans online. There are many people out there in today’s dismal economic conditions that may need to meet their monthly financial obligations and just do not have the means. For those that own a vehicle with a clear title there is an answer – vehicle title loans.
