The Different Types of Consumer Loans

Most people come to a point in their lives where they need a loan for one reason or another. You could be in debt, funding a new business venture or want to make a large scale purchase. Regardless, there are different types of loans that can help you. Depending on what you need, there are different loans to meet those needs.

Personal Loans

The most common and easily accessible loan is a personal loan. Most banks offer these types of loans by reviewing your income and credit score. They are a good option if you are not in need of a large sum of money. A downfall of these loans are that the interest rates are typically high. People refer to this type of loan as an unsecured loan because there is no collateral backing it (like a car or home).

Credit Cards

Most of the population has credit cards and most merchants accept them as payment. Credit Cards are loans since you are allowed to use their money and pay back at a later date. They are known for their easy and quick application process. Similar to personal loans, they are known for high interest rates.

Home Equity Loans and Home Equity Line of Credit

You can use the equity on your home as collateral for a loan. A home-equity loan is a loan determined by the unused equity in your home. You can determine the equity available for a loan by taking the difference between the home’s market value and the amount still owed on the mortgage.

A home-equity line of credit is very similar to the home-equity loan. With a loan, you receive a sum of money and pay it back. With the line of credit, it is revolving meaning you can keep paying it back and using the loan again.

Title Loans

Title loans are available to use your car title as collateral. If you own the title of your car, it is a possibility for you. You can apply for title loans online as well, which makes it quick and easy. These loans are typically for smaller amounts of money and for short periods of time.

Small Business Loan

If you need a loan to start a business then a Small Business Loan may be a good option for you. With these loans you need to submit a business plan that must be approved by the small business association or lending institution. Being approved is not easy. Most institutions also require you to personally back the loan.

In conclusion, there are many options out there for your loan needs depending on your situation.

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