Home Page » Know These 5 Types of Loans that You Can Use as A Reference in Determining the Best Loan for You
Two hands mutually agree on a loan

Know These 5 Types of Loans that You Can Use as A Reference in Determining the Best Loan for You

Several types of loans are a good choice to make payment with large nominal fees. Especially if your financial condition is not enough but you need something quickly, then a loan can be the best choice you can make.

Well, currently there are many types of loans provided by banks. Starting from loans for education, car loans, housing, or emergencies such as medical needs. For you who want to make a loan at a bank, you need to know the types of loans below.

1. Personal Loans: Commonly Used Loan Types

Personal loans are types of loans that must always be available at all banks or lending institutions. The repayment period is usually around 24 to 84 months. This loan can be used for various needs except for education fees and illegal acts. Most people use personal loans for the following needs:

  • Holiday.
  • Wedding
  • Emergency.
  • Medical treatment.
  • House renovation.
  • Debt consolidation.
  • Move cities.
  • Purchase of expensive computers or electronics.

There are two types of personal loans, namely secured loans and unsecured loans. You have to go to the nearest bank to inquire about the terms of the two types of loans.

Read also : Do You Want to Have Insurance? Get to Know The 6 Types of Insurance

2. Student Loans: The Best Loans Specifically Provided for Education

Student loans are used to finance education such as paying tuition and living expenses while studying. Therefore, you cannot use this loan other than for non-formal education needs including training or informal classes.

There are two types of student loan providers: federal and private. Federal loans offer more protection and benefits but the interest rates are high. Meanwhile, private loans provide fewer protection services and benefits but have lower interest rates. So, choose which loan suits your needs based on your financial condition.

3. Mortgage Loans: Loans that Help You Pay for Your Home Purchase

A man writes mortgage loans on a whiteboard.

Maybe you are currently financing a mortgage? Or are you planning to buy a home with a mortgage? Well, mortgage loans are the right choice for you. There are several banks and lending organizations that offer these loans.

Mortgage lending institutions consist of federal agencies and private institutions such as Fannie Mae or Freddie Mac. Mortgage loan programs provided by the government can be used by certain groups of people. Here are several types of mortgage loans provided by the government.

  • USDA loans that can be used by low-income rural homebuyers.
  • FHA loans that can be used by people with low- and medium-income levels.
  • VA loans that can be used by active military members or military veterans.

Read also : The Short-Term Mortgage Loan that works best for you

4. Payday Loans: Types of Short-Term Loans that are Also Widely Used

This loan is a type of short-term loan that lasts until your salary in the following month. This loan is not a credit-based loan. However, these loans are often referred to as predatory because they impose large financial costs on their borrowers.

One example of this type of loan is online loans. Maybe, at first this loan can really help you. However, in the end you will realize that payday loans cost you more and trap their users in higher debt obligations than borrowed ones. So, you need to be careful if you choose to use this type of loan.

5. Small Business Loans: Loans for Business Owners

Currently, there are many types of business loans including small business loans, working capital loans, term loans, and business equipment loans. Business owners that have 300 or less employees can benefit from this form of credit.

This type of loan has many requirements that must be met. However, the loan funds that you will get are also very large. Therefore, you must pay attention to the performance of the business you are running. If indeed the income from the business is good enough and allows it to be used to pay off the loan, then you can apply for a loan to the bank.

Those are some types of loans that you can use as loan references that suit your needs. Make sure you pay attention to your financial condition, your needs, and the lending institution you are aiming for, so there is no risk in the future.

Read also : Will Artificial Intelligence Take Over the World?

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top