Home : Finance : 6 Common Types Of Loans To Know About

6 common types of loans to know about

6 common types of loans to know about

One may need money for various reasons, whether it is for funding further education costs, buying a new house, or starting up a new business. A steady income may cover most of one’s regular expenses, but major purchases or emergencies may require one to borrow funds. The banks and federal organizations offer many options for people to borrow money with varying interest rates and repayment schedules. Read on to understand the common types of loans.

Personal loans
Personal finance is a versatile option that can help fulfill various needs. It can be availed to cover expenses like emergency bills, vacation, medical treatment, relocation to a different city, home renovation, wedding, or buying expensive electronics like tablets, computers, washers, and refrigerators. Usually, the repayment period can range from a few months up to a couple of years and the interest rate can either be fixed or variable, depending on the preference of the borrower. One can apply for personal loans via a bank or an online lender.

One can choose between a secured and unsecured personal loan . In case of a secured loan, the borrower needs to provide a collateral that can back it up. This collateral can be any valuable, such as a vehicle, savings account, life insurance policy, or gold, which acts as a type of security for the lender who can claim it if the borrower fails to repay the loan amount. Secured loans are relatively cheaper than unsecured ones as the lender has a collateral backing. Alternatively, unsecured loans don’t need any collateral and are also known as signature loans since the lender does not have any security of the loan except the borrower’s signature. Unsecured loans are more convenient and quicker than secured ones, but they also tend to be costlier or have higher interest rates. Also, people with a good repayment history and a high credit score may be sanctioned such loans as the lender takes a major risk in issuing these.

Mortgage loans
If one wants to purchase a home but doesn’t have the funds to pay for it upfront, a mortgage loan can be a useful option. There are different types of mortgages available, including those offered by banks and credit unions. Apart from them, certain government-backed loan programs exist for particular groups of people, such as USDA loans for low-income homebuyers in rural areas, FHA loans for those with low to moderate income, and VA loans for active-duty service members and veterans.

The repayment schedule for a mortgage can last 10 to 30 years or even longer depending on the borrower’s financial situation. It is important to note that the property purchased with a mortgage loan serves as collateral, and foreclosure may occur if one does not make repayments as required.

Home equity loans
Home equity is the portion of house value that one actually owns after the balances of their existing mortgage or debts have been subtracted. So, a home equity loan becomes a sort of second mortgage. Lender disburses the loan amount in lump sum to the borrower and gets it back in installments until the amount is fully paid off. As a homeowner, one can use the home equity loans for any purpose, from financing home renovations to emergency medical bills.

The interest rate of this loan type is usually fixed, so the installment amount throughout the loan tenure won’t change. The security against this loan is the home itself, which can be subjected to foreclosure if one defaults on the payments. Before issuing this loan, the lender usually finds out how much of the homeowner’s current income goes into paying the original mortgage. This allows the lender to know if the homeowner can afford more debt. If it is more than 43% of one’s income, one may not be eligible for the same. Apart from this, the credit score, age, and employment details of the borrower are also reviewed. A few well-known home equity lenders are Bank of America, PNC Bank, and LoanDepot.

Small business loans
Small businesses are constantly in need of finance due to their level of activity, limited budgets, and potential year-on-year growth. Small business loans are a helpful solution for entrepreneurs in need of money or those who have trouble qualifying for traditional financing options. Although these loans come with high interest rates, they are easily accessible.

Small business loans are popular as they are backed by the U.S. Small Business Administration (SBA). Here, if a business owner defaults payment, the federal government will pay 85% of the loan amount to the lender, which significantly lowers their risk. Entrepreneurs get up to 25 years to repay this debt and they can use the loan amount for any business-related work. Although it may appear to be a desirable type of loan, its lending process is intricate and thorough, and one is required to have a high credit score to qualify. Entrepreneurs can also opt for equipment, working capital, and term loans, all of which can provide quick cash to them and make business funding easier.

Auto loans
Those wanting to purchase a vehicle can opt for a special type of loan for automobile. These are issued on the vehicle, which acts as the collateral. Usually, auto loans may have a tenure of three to seven years or more in some cases. Apart from banks and credit unions, at times the dealership from where one buys the vehicle may also offer a loan option. This, however, may be more expensive, so it’s best to shop around and research extensively before opting for the one with the best terms.

Student loans
This is a popular loan type is for students who want to pursue higher education. It is issued by banks, federal organizations, or private lenders. Usually, students prefer government loans since they may not require a credit check and have a wide range of repayment options, including income-based repayment, forgiveness, or forbearance, which is a temporary pause or reduction in monthly installments due to unforeseen circumstances.

Most Popular

5 mistakes to avoid before bed for better sleep

5 mistakes to avoid before bed for better sleep

Have you ever woken up feeling tired and lethargic despite sleeping for seven to eight hours at night? It could be due to poor sleep quality. Disturbed sleep influences the rest of your day: how you think, your performance at work, and other tasks. The causes of poor sleep are many, including a faulty mattress, distractions in your room, or a heavy dinner. Avoiding the following mistakes before bed can help you sleep better: Staring at a screen Using gadgets close to bedtime is probably the most common mistake in the digital age. The blue light emitted from screens affects the production of a specific hormone responsible for inducing sleep and regulating the circadian rhythm. Apart from the blue light emission, the television or mobile phone sound can be a distraction that keeps you awake. High noise levels create lots of mental stimulation and disturbance, preventing the brain from shutting down. Hence, it is advisable to avoid using phones, televisions, and laptops for at least an hour before bed. Exercising Exercise is among the best solutions for good health, but you must do it at the right time. Physical activity late in the evening or at night hampers sleep patterns by increasing stress and raising body temperature.
Foods to be avoided by diabetes patients

Foods to be avoided by diabetes patients

Food gets broken down into glucose by the body to release energy for its functioning. Most meal plans combine fats, proteins, sugars, and other essential carbohydrates vital for healthy growth and organ function. However, people with diabetes should be careful about seemingly healthy foods as it can trigger a spike in their blood glucose levels. Here are different foods that are bad for diabetes and should not be eaten regularly: Various foods that are bad for diabetes patients Fruit juices and other drinks Sugar consumption via beverages can spike insulin levels drastically. Did you know that lots of seemingly healthy store-bought fruit smoothies, sports drinks, bottled juices, and sodas can spike blood sugar levels too? Also, natural fruit juices are not necessarily a healthy option as they are high in fructose. Aside from this, cola, iced tea, lemonade, and other flavored beverages are excessively high in carbs, sugar, and fructose. Their regular consumption can trigger insulin resistance, forcing healthy cells to reject insulin and extract glucose for energy. Another crucial thing to remember is to avoid any type of spirit if you have diabetes. These contain empty calories and can worsen the condition significantly. Cereals, yogurt, and dried fruits Daily breakfast cereals are fortified with essential vitamins and nutrients that make up for a wholesome meal.
3 foods to avoid for better lung health

3 foods to avoid for better lung health

Strengthening the lungs can help one avoid respiratory issues and diseases. Even when diagnosed with a lung-related illness, making significant changes to the lifestyle and food regimen can help people manage the symptoms and restore lung function. However, it is equally important to avoid the food items that damage these organs and cause issues like inflammation, sneezing, and wheezing. Here are a few foods to avoid to improve lung health: Salty food Foods with excessive salt should be avoided as their long-term consumption can have severe consequences on the overall health. Excess sodium in such food items can enlarge the muscles of the heart, cause headaches, increase blood pressure, and lead to a wide range of kidney-related issues like stones. Such foods can also have a negative effect on the health of the lungs and have been linked to an increased risk of bronchitis. Additionally, too much salt in meals can also worsen the symptoms of respiratory issues like asthma. This is because sodium can cause fluid retention, leading to shortness of breath in those with lung diseases. To reduce its intake, one should start by limiting salt in their meals and instead add more herbs and spices as seasoning.
Migraine – Ways to manage the condition

Migraine – Ways to manage the condition

Migraine headaches are a devitalizing experience. It completely saps the person of energy and prevents them from being productive during these episodes. There is usually a build-up to a migraine attack which is different for every individual. The phase before the actual migraine attack is known as the aura, and people may report seeing flashes of light or experiencing a tingling sensation. Below are some options for treating migraine headaches: Treatment options Nurtec Nurtec is a treatment option that helps relieve some symptoms of migraines. It reduces the severity of headaches and sensitivity to light. Nurtec is usually taken on alternate days to prevent migraines and other pain associated with the condition. Ubrelvy Ubrelvy, a fast pain-relief, is a treatment option that blocks calcitonin gene-related peptide (CGRP) in the body. CGRP is associated with migraine attacks, and suppressing it goes a long way in treating the condition. Excedrin This pain reliever does not just treat migraine headaches but also pain in other parts of the body. Excedrin provides fast pain relief to the patient. Qulipta Qulipta is a treatment option that helps prevent migraines over a more extended period. However, medical professionals do not recommend this treatment option to people suffering from kidney or liver problems.
4 easy tips to keep dogs free of ticks and fleas

4 easy tips to keep dogs free of ticks and fleas

A pet’s fur can be the perfect breeding ground for fleas and ticks. These pests can annoy your pet throughout the day. Such parasites can also cause several health problems like Lyme disease and skin infections in dogs and humans. Fortunately, pet care experts have developed several ways to rid these critters of your furry friend. Here are four handy tips that help with managing flea and tick infestations in dogs: Initiate a treatment plan If your pet develops a pest infestation, the first and foremost thing to do is get them on a treatment plan. Here are a few prescriptions that can be helpful: Bravecto® (Fluralaner) This prescription for dogs comes in two types: a chewable option or a topical solution. Bravecto is approved by the FDA and works on dogs and puppies at least six months of age who weigh at least 4.4 pounds. If you pick the chewable option for your pet, it must be given with their food once a month. Alternately, the topical solution must be applied once every 12 weeks. You can also check out special offers on Bravecto’s website for attractive discounts on their products. Simparica Another recommended treatment for fleas and ticks is the FDA-approved chewable from Simparica.

Popular Articles

5 mistakes to avoid while using vacuum cleaners
Home
01

5 mistakes to avoid while using vacuum cleaners

Vacuum cleaners are one of the most reliable home cleaning appliances. With the help of the machine, cordless or corded, one can get rid of dirt, cobwebs, and allergens found around the house. The device is used for cleaning purposes, therefore, it is vital to handle the vacuum cleaner correctly for optimal usage. That said, not everyone knows how to use a vacuum cleaner efficiently. Below are the common mistakes made while using them: Failing to empty or clean dust bags and filters It is important to empty and clean vacuum dust bags regularly. Failing to do so can affect the efficiency of the vacuum cleaner. Despite vacuuming, if you still notice dust stains on the carpet or the floor, it’s an indicator to empty the dust bag. Another tell-tale sign for the removal of dust bag is when your vacuum cleaner seems to be losing its suction power. The frequency of emptying the vacuum bags will depend on how often you use the device. A full vacuum dust bag will lead to an accumulation of dust and the breeding of bacteria and germs in the bag. Many latest models are equipped with disposable bags that are much more convenient.
Read More
How to manage osteoporosis and improve bone health
health
02

How to manage osteoporosis and improve bone health

Osteoporosis is a condition that makes the bone brittle and weak. When severe, even slight pressure caused by coughing, bending over, or falling can cause a fracture. Such fractures are predominant in the spine, wrist, or hip. Osteoporosis occurs if the new bone fails to keep up with the loss of the old bone. It affects men and women, but post-menopausal women are more susceptible. Let’s discuss the correct osteoporosis treatment and management plan: Treatment plan Prolia It is a prescription treatment plan for relieving osteoporosis in women post-menopause who cannot use other options or have not responded well to prior treatment and are susceptible to fractures. Doctors will prescribe it for at least six months. Prolia helps treat both men and women. However, professionals do not recommend it for pregnant women, women trying to get pregnant anytime soon, or people with low blood calcium. Further, those allergic to denosumab or any other Prolia ingredient must avoid it. Evenity Evenity helps with osteoporosis in two ways: it slows down bone loss and helps build new bone simultaneously. It is an FDA-approved treatment for osteoporosis that comes as a prefilled, single-use syringe with solution. But Evenity may have severe side effects.
Read More
10 human foods that are safe for dogs
Pets
03

10 human foods that are safe for dogs

Many pet owners tend to share their own food with their pets. After all, it can be hard to say no to the puppy eyes watching you while you cook or eat. However, humans and dogs metabolize food differently, and so, what is safe and healthy for you can be dangerous for your four-legged companion. So, here are a few safe and delicious human foods that even dogs can enjoy: Peanut butter Not just us, even dogs can’t get enough of peanut butter. Fortunately, it is safe for dogs and contains nutrients like healthy fats, vitamins B and E, protein, and niacin. However, it is high in fat and calorie content, so overindulgence can lead to health issues. Also, plain peanut butter that does not contain added sugar, salt, or artificial sweeteners, should be offered to dogs. Chicken Cooked chicken, without bones and spices, can be a perfect meal for canines. It is one of the best sources of protein, making it one of the most common ingredients in dog foods. Cooked chicken bones should never be given to your pets as these bones can splinter and lead to choking. Carrots Carrots can be your go-to choice for veggies that can be shared with dogs.
Read More