Thinking About Getting a Loan? Know Your Types and Options

There are lots of situations in life where you’re going to want to get a loan. The smart money’s on knowing your options beforehand so that you can get the most money possible, with the lowest interest rate, and have payments set up so that you can repay debt in the most efficient way possible. For example, if you plan on getting a loan for college, go ahead and think about whether you can refinance student loans later on.

But, it’s not always obvious which type of loan you should be getting for what type of purchase, which is why you should do things like look up home equity, research private loans, talk to a banker, think about what it means to finance a car through a dealership, and know what position the government is in with respect to student loans. All of this information is important as an adult!

Where Does Home Equity Fit In?

Learning about home equity loans is going to be one of the more complicated routes that you can take to understanding money and finances, but once you have the basic theory down, you can leverage it to your advantage in many situations As a homeowner, you have a pretty solid amount of power when it comes to needing money, as you can essentially use the value of your house as a powerful backing for your financial trust factor.

Private Loans

Private loans make up a majority of money that can be used for things like starting a business, improving your home, getting cash together to pay for big trips or weddings, or any other number of moderately ‘risky’ events. The interest rates are extremely variable depending on how good your credit is, and how large the company is that you’ll be working with.

Loans From Banks

When it comes to loan security, getting money from a bank is definitely a steadfast and more official path to take. The only thing about this route is the fact that they are fairly strict when it comes to approval in the first place, and how often your repayments need to be made. It’s never a good idea to default on a bank loan.

Financing To Buy a Car

If you want to buy a car that you don’t have the cash for already, there are often financing options available through a dealership. These deals are, for better or worse, designed to favor the dealership rather than actually give you the best rates, so exercise caution if something seems too good to be true.

Government Student Loans

In a category all on its own – the student loan. You’d like to think that anyone could go to college, and then the job that you get when you graduate will allow you to pay off your loans quickly, but especially with regard to the most recent generation of people moving into the workforce, this often isn’t the case!

Thinking About Getting a Loan? Know Your Types and Options 3
Anna Johansson
Anna is a freelance writer and researcher from the Olympia, WA area who loves to obsess about weird topics and then write about them. When she isn't writing, she is outside on her bike and comtemplating her eventual trip to graduate school.

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