Guide to Loan types

Anyone that has ever looked into taking out a loan will know that there are many different loans available to suit different needs and circumstances, which means that you need to consider the facts carefully before you make a decision on your loan. It is important to ensure that you get the right loan for your needs, and in order to do this you need to learn about the different loan options and types so that you can make the right decision.

First of all you need to remember that all loans come under one of two categories, and these are secured loans and unsecured loans. In order to take out a secured loan you need to be a homeowner usually with some level of equity in your home. In order to take out an unsecured loan you do not have to be a homeowner but you will need to have good credit. With both loan types you will need to meet all the other eligibility requirements as set by each individual lenders, such as credit status, income levels, employment and financial status, age requirements, and others.

Loan types

Below are some of the popular loan types that may suit your needs:

  • Consolidation loans: These loans are designed to enable borrowers to pay off their existing smaller debts such as loan or credit cards with one larger loan. This enables you to enjoy fewer debts and creditors to deal with, which makes it easier to keep on top of your finances, and with a low rate consolidation loan you could also cut your monthly outgoings by a considerable sum, leaving you with more disposable income each month.
  • Home improvement loans: These loans are designed for homeowners that need money to make improvement to their properties, which can then add further value to the property, thus recouping some or all of the cost of the loan in some cases.
  • Personal loans: These loans can be used for any purpose, and many people take out personal loans each year to pay for purchases such as a car, a holiday, their wedding, and a variety of other common purchases and purposes.
  • Payday loans: These are short term loans that are offered to those looking for finance on a shorter term basis to tide them over till payday. There are no credit checks with these loans, and the borrowing levels are quite low.
  • Car loans: Some people decide to take out a loan specifically to purchase a vehicle, as they may not want to take out dealership finance for one reason or another. You can get loans from a number of banks and lenders that are specifically designed for vehicle purchase, and for some people this could work out far cheaper than dealership finance.
  • Wedding loans: Getting married can be an expensive business, and many people do not have the available funds to get hitched when they want to. A wedding loan enables you to get the money that you need to get married, and you can then make repayments at a pace that suits your pocket.