When it comes to navigating finances, there is a seemingly endless list of factors and details to be mindful of as you move through the process of budgeting, saving, investing and paying off debts. While each working professional or homeowner’s financial situation is unique, there are common denominators that connect us with one another.
Loans are an important part of everyone’s financial journey and are often utilized in one way or another worldwide. Loan options have become a key resource for those looking to streamline their debt payments, afford medical treatments, urgent home repairs and more.
When it comes to understanding the varying types of loans available, we’ve put together a comprehensive list of loan types to help you make the right decision.
A personal loan is the broadest and most versatile type of loan available and can cover a wide range of subcategories, ranging from medical emergencies to unexpected home repairs. This type of loan is often used to consolidate debts, streamlining multiple payment plans into one cohesive monthly payment.
Most personal loans are synonymous with installment loans and can be obtained virtually, without going through the traditional red tape. In this case, knowing how to apply for an online loan can effectively save you time and put the money in your account faster, so you can continue fulfilling your daily responsibilities.
If you’re considering going back to school, a student loan will be the most effective option for your situation. Student loans are designed to cover your tuition, books, and any necessary education-related expenses.
There are two ways to go about applying for a student loan. The first is through a traditional lender or federal government body. The second is to apply directly to the school’s financial aid department. Each option will come with a repayment plan and designated interest rates to help you stay on track of those payments.
Home Equity Loan
A home equity loan is another versatile option that can be used for a wide range of necessities. In this case, the amount borrowers receive is dependent on the equity in their homes. Equity is calculated by subtracting the balance left on a mortgage against the value of the home. If your home has a significant value, you may stand to gain more than a standard personal loan, though this is dependent on a case-by-case basis.
Loans and Interest Rates
When it comes to interest rates, each type of loan is unique. What you receive from a personal loan from one alternative lender may not be the same with another company. It’s important to consider all your options before deciding which lender is right for you.
Interest rates can also impact the ease with which you can make your monthly payments. If the rate is too high, you may get sucked back into a debt spiral with compounding interest. Be sure to speak to an alternative lender representative with your concerns before agreeing to any loans to ensure you’re making the right choice for your household.