Loans are those tools that help you in buying or achieving a thing that you cannot actually afford to make cash payment on. For example, while buying a home, hardly people make cash payments. Homeowners in general take out a loan in order to buy their home. Similar is for a person planning to buy a car. In fact, the cost of education too have increased so much that it has become almost mandatory for each of the students to take out educational loans.
Types of available loans
Some of the types of loans available are discussed below:
1. Home loans – Home loans also known as mortgages are taken out mainly for the purpose of buying a home. These are secured loans and thus the interest rate on these loans is relatively low. The home is kept as collateral against mortgages. However, these loans can also be used for home improvement purposes and for consolidating debts.
2. Car loans – Car loans are those (secured like home loans) which are taken out in order to finance the car. Car loans are a type of auto loans where auto loans are used to finance any type of automobiles.
3. Personal loans – Personal loans are those types of loans used by borrowers for personal reasons or even home improvement purposes. These are the unsecured loans and thus the interest rates are comparatively high.
4. Student loans – Student loans are those loans which are used by the students in order to finance their education. These loans are in general of two types – private and federal student loans.
5. Holiday loans – Some people even take out loans while going for a holiday. Some, the loans used to pay for the costs of a holiday are known as the holiday loans.
Payday loans is another type of loan which is popular both for positive and negative reasons. These loans are available without credit checks, so the cash comes to your hand relatively fast. However, in most of the cases it has been seen that payday lenders are not licensed and most of the states have prohibited payday lending.
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