Loan contracts come in various forms and terms˳ It will actually range from a simple promissory note between friends and family members to more complex loans such as auto, payday, mortgage, and student loans˳ Regardless of its type, each loan will be governed by policies and guidelines to protect clients from unfavourable practices such as excessive interest rates˳ Moreover, loan length as well as default terms must be clearly detailed in order to avoid any confusion or perhaps possible legal action˳
In case you are in need of money for a very important item or perhaps to help make your life more manageable, it is a must that you are familiar with all the kinds of loans that may be accessible to you along the different terms you can expect˳
Different Loan Types
There are different types of loans which have a certain intended use˳ They can vary by length of time, by when payments are due, by how interest rates are calculated, and by a number of other factors˳
Mortgages – These are distributed by banks in order to allow consumers to buy homes they cannot pay for upfront˳ This will be tied to your home˳ This further means that when you fail to pay it, your property will be foreclosed˳ As opposed to any other loan types, this has the lowest interest rate˳
Student – These are offered to college students along with their families in order to help cover the cost of higher education˳ Generally, there are 2 main types of student loans – those funded by the government and those by private lenders˳ Experts say that the first option is better since it comes with much lower interest rates and better repayment terms˳
Personal – These can be used for any personal expenses˳ This option does not have a specific purpose˳ It is for this reason that many are attracted to apply for such˳ Terms of this loan type will greatly depend on your credit history˳
Small Business – This is often granted to entrepreneurs or to aspiring businessmen to help them set up or expand their ventures˳ Small business loan options will greatly depend on the needs of your enterprise˳
Auto or Car – This is quite similar with mortgages since it is tied to your property˳ They will help you afford a certain car; however, you will risk losing the car when you miss payments˳ Auto or vehicle loans might be offered by a bank or by the car dealership directly˳ Though those offered through dealership are somewhat convenient, be aware that they usually cost more˳
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