What Kinds of Consumer Loans are on the Market Today?
Few people are in a position to buy what they want using cash. Most of us need to finance purchases and other needs by securing loans. What you may not know is there are more options for loans today than at any time in the past. By knowing a little more about the types of loans on the market, you’re positioned to know which one would be best in a given situation. Here are several examples of loans that you may consider using at one time or another.
Vehicle Loans
Among all the loan types available today, this is the one that most of us will have at one time or another. Vehicle loans allow us to purchase a vehicle and pay off the expense over a period of time. This is done by providing monthly payments until the debt is settled in full.
Some vehicle loans are structured to cover the entire cost. Others will require that the applicant supply some sort of down payment or deposit. With either case, you get possession and use of the vehicle while paying off the balance.
One of the nice things about loans of this type is they rarely come with any penalties for early settlement. If you find yourself able to double up on the payments and retire the loan sooner than the original settlement date, you’re likely to save a little on interest.
Mortgage Loans
Owning a home is a primary goal for many people. This will often require obtaining financing in order to make it happen. As with the vehicle loan, you’re often expected to supply some sort of down payment on the property, then the lender supplies the rest.
The amount that the lender will supply depends on the value of the property. Obtaining a loan that covers around 80% of the purchase price is not unusual. Should you find yourself buying a valuable property at less than the current market value, the lender may be willing to cover more of the asking price.
A mortgage loan is one of the best examples of long-term financing. You may finance the purchase for anywhere between 15 and 30 years. As with the vehicle loan, retiring the debt sooner rather than later will help reduce the amount of interest that you ultimately pay.
Consolidation Loans
Consolidation loans have helped many people reorganize their debt so that it’s easier to retire. Essentially, you would secure a loan that provides enough funding to pay off all or at least most of your debts. Once those debts are settled, you’re left with the monthly loan consolidation payment to make. That’s much easier to track than several monthly obligations that come with different due dates.
It’s not just about having fewer obligations to work into the budget. The right choice for a consolidation loan will come with an interest rate that’s lower than many of the debts you retired. In this sense, the loan could allow you to save money and shorten the amount of time required to become debt-free.
Remember that consolidation loans only work if you avoid creating new unnecessary debt. While paying off the loan, consider each potential purchase carefully. Doing so will ultimately help you get to a better place financially.
Short-Term Loans
Loans of this type are usually structured with terms ranging from a few months to a couple of years. They’re great for covering unexpected expenses or providing a little money to get by while you wait for some type of anticipated windfall.
Loans of this type come with repayment schedules, allowing you to gradually reduce the outstanding balance. As with many other loan types, short-term loans may be secured or unsecured. Compare rates and terms between different lenders rather than accepting the first offer that comes your way. That will help you locate the best deal.
Personal Loans
While some loans are designed to serve a specific purpose, others are move flexible. That’s the case with a personal loan. These types of lending arrangements may involve a lender who’s someone you know or a group of investors who have come together for the purpose of providing these kinds of loans. In either case, the requirements for approval are often more flexible than the qualifications put in place by banks and similar institutions.
These kinds of money loans can be used for whatever purpose you have in mind. It’s even possible to secure a personal loan and take care of several different projects. For example, the money from the loan may be used to buy a new kitchen appliance, make a car repair, and fund a long weekend getaway with someone special. It’s up to you.
Cash Advance or Payday Loans
There’s one other loan type that you could try: the payday loan. Sometimes referred to as a cash advance, you receive a lump sum of funds while committing to repay the sum plus interest when your next payday rolls around. While it’s true that this type of loan has helped people who need money quickly, it comes at a price. Specifically, the rate of interest on this type of loan is higher than the interest rates on other kinds of lending arrangements.
Consider the use of this type of loan closely. Perhaps it is your best bet, if you can afford to pay off the debt quickly and you have an exceptionally pressing need and need the money today. If you can wait for a couple of business days, a short-term loan that you repay with several installment payments would be a better choice.
These are only a sample of the loans available to consumers. What sort of loan would work best for you? Look around and see what you can find. The right choice will take a lot of pressure off your mind and make it easier to keep moving forward.
