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Loan contracts come in various forms and terms. It can actually range from simple promissory notes between friends and family members to more complex loans such as auto, payday, mortgage and student loans. Regardless of its type, every loan will be governed by policies and guidelines to protect customers from unfavorable practices like exorbitant interest rates. Additionally, the length of the loan as well as the default terms should be clearly detailed to avoid any confusion or perhaps possible legal action.
If you need money for something very important or perhaps to help make your life more manageable, it is essential that you are familiar with all the types of loans that can be accessed with the different conditions you can expect. .
Different types of loans
There are different types of loans that are used for a specific purpose. They can vary by length of time, when payments are due, how interest rates are calculated, and a number of other factors.
mortgage – These are distributed by banks to allow customers to buy houses that they cannot afford to pay in advance. This will be attached to your house. This means that when you fail to pay it, your property will be foreclosed. Unlike any other type of loan, this has the lowest interest rate.
student – This is offered to college students with their families to help cover the costs of higher education. Generally, there are 2 main types of student loans – those funded by the government and those funded by private lenders. Experts say that the first option is better as it comes with much lower interest rates and better repayment terms.
Personal – This can be used for any personal expenses. This option has no specific purpose. It is for this reason that many people are attracted to such an application. The terms of this type of loan depend a lot on your credit history.
small business – These are mostly given to entrepreneurs or aspiring businessmen to help them set up or expand their ventures. Small business loan options will depend greatly on the needs of your enterprise.
Auto or Car – This is quite similar to a mortgage as it is attached to your property. They will help you buy a certain car; However, you risk losing the car when you miss a payment. Auto or vehicle loans can be offered through banks or directly through car dealerships. Although the ones offered by dealerships are somewhat convenient, be aware that they usually cost more.
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