Government loans are those that the government of a country provides to the citizens of that country to meet their needs and for their upliftment or betterment. It helps in reducing the wide gap between rich and poor and streamlines the economy of the country. Government loans are for almost all kinds of purposes like education loan, loan to buy a home- home loan, loan to set up a business- SBA- small business loan, buying a car, heavy machinery etc.
Government loans are broadly divided into two categories – VA and FHA. Ex ie VA loans are quite beneficial because they do not require any down payment and mortgage insurance. They are under the sponsorship of the Veterans Administration from which the name is derived. These loans are provided at fixed rates which are not subject to revision. VA loans are only for eligible veterans and not the rest of the public.
FHA loans can be given to any qualified person who wants one. They require little extensive paperwork and are often chosen by people looking to purchase multi-family properties because they have low down payments.
If we do a comparative analysis of the loans provided by private companies and banks and the loans provided by the government, the latter exceeds the former in many respects. The sole motive behind lending money to the people of a private bank or company is to make profits or to accumulate more money. But the government works for the noble cause of the benefit of its citizens. It does not try to fulfill any personal objective rather the whole idea is to strengthen the economy of the country.
It is not that unlike any other private company that gives loans, the government does not have any criteria or a set of parameters to decide whether they are eligible for all the loans they have applied for. But this criterion is often mild. The government sometimes gives loans even to those people who do not have the capacity to repay it. Not only this, in case of any natural calamity or calamity, if the borrowers are unable to repay the loan, then the government waives off the loan amount.
The interest rate offered on government loans is quite low as compared to private banks and companies. Also the government can provide large amount of loan for a long period of time. This enables relatively smaller monthly installments and greater security. Private companies usually charge high interest rates from their customers to make huge profits. They lure the customers by promising instant delivery of the loan amount at their doorstep with minimum paperwork. Government loans generally require more documentation, but this should not negate their benefits. The best way to avoid rushing in while going for any government loan is to choose a qualified agent. These agents go from one office to another and do all the official work (such as collecting, checking and submitting documents). The best part is that they are not very expensive and provide you with ample knowledge, guidance and service as per your convenience.
Thus make a wise choice, take a loan through the government. They can be of tremendous help as the government is always for the welfare of the public.