reoverSaving money is always a good idea. For large purchases like a house or car, as well as unexpected expenses such as medical bills, it’s a smart move.
You can get a loan if you don’t have the funds to save up for the future. There are loans that are specifically designed to buy specific items.
There are 16 types of loans that you could use to help you make the purchases necessary for your needs.
1. Personal Lending
Personal Loans These loans are for personal use.
- Medical treatment
- Home Renovations
- Consolidation and consolidation of debt
- Moving to another city
- Computers or other expensive electronic gadgets
Moreover, personal loans come in two forms: secured and unsecured.
Unsecured Loans, on the other hand, do not require collateral and can be secured only with your signature, as the lender takes on greater risk.
2. Auto Loans
Automobile loans can be used to buy an automobile. The terms of repayment range from three to seven years. Should you default on your payments, the lender may repossess the vehicle.
Auto loans are common from banks, credit unions, and dealerships. These tend to be more expensive, but they can still provide a great deal of financing.
3. Student Loans
Student loans can only be used to pay tuition and living expenses at accredited institutions. You cannot use student loans for specific types of education like programming boot camps, informal classes, or other non-technical courses.
Federal and private student loans are available.
4. Mortgage Credit
Mortgages are a way to finance the purchase of a home.
Certain categories of people have access to loans that are backed up by government programs, such as
- USDA loans available for rural buyers with low incomes.
- FHA loans available to those with moderate-to-low incomes.
- VA loan for active-duty military personnel and veterans.
5. Home Equity Loans
You may be eligible for a mortgage for your home if you have equity in your property. The loan is paid in one lump sum and is repayable over a period between 5 and 30 years.
Add the mortgage balance to the assessed value of the home to calculate the equity. If you have $100,000 equity, the loan limit is 85%.
6. Credit-builder Loans
Credit-builder loans can be short-term loans to improve your credit score. These loans are available to anyone with poor credit, or no credit. Community Development Financial Institutions (CDFIs), lending circles, and online lenders are all options.
Instead of receiving money at the start like a traditional loan, you pay fixed monthly installments and receive the loan amount back at the end.
A credit-builder loan is a great way to start building credit, especially for young people.
7. Consolidation loans and debt
Consolidating your debt can make it easier to pay off other debts. By asking for another credit, you could reduce your monthly payments. Also, lower rates may be available, which could help you save money over the long-term.
You can take out a loan to consolidate your debts and pay your bills. However, it is possible to get a lower interest rate than your current credit. The lender will pay the debts immediately, but you will have to pay the money yourself.
8. Payday loans
A payday loan is a short-term loan that lasts for a few days before your next payday. But, they can still be considered predatory and have many reasons.
First, they charge high finance fees, up to 400% APR in some cases. This can trap people in debt that is much more costly than what they borrowed.
9. Small Business Loans
There are many types of small-business loans. These include working capital loans, SBA loans, and term loans. You can apply for freelancers or even local businesses such as hair salons, landscapers, and food establishments.
Small-scale loans for businesses require more qualifications than personal loans, especially in the case of SBA loans. These loans are the best option for financing small-scale businesses.
10. Title Loans
Title loans can be a different kind of secured loan. They let you pledge your vehicle as collateral. Lenders charge a monthly fee of 25% of the loan amount. This is equal to the annual rate (APR), which is at least 300%.
These loans are different from traditional cars or RV loans for a few reasons:
- These products are very expensive.
- To secure the loan, the title is given by the lender.
- These short-term loans typically last for 30 days.
Title loans are often included in the same category as payday advances. They’re short-term, extremely expensive loans that can be repaid quickly and are generally viewed as precarious.
11. Loaning from a Pawnshop
Pawnshop loans are another type of loan we don’t recommend. They have a low loan limit, require rapid repayment, and can be expensive. You must bring something to the pawnbroker, such as an item of jewelry, an electric tool or a musical instrument.
A pawnbroker will assess the item and offer a loan if they are willing. The broker can sell the item and take the money.
12. Boat Leasing
Boat owners can get loans to finance their purchases. It’s important to understand depreciation.
Boats and other vehicles lose value over time. You will have to repay the loan even after you sell your boat.
13. Recreational vehicle (RV) Credit
Secured or unsecure loans can be used to finance RVs. However, luxury RVs that are more expensive are secured using the RV as collateral. These loans are similar to auto loans.
The amount you receive will be determined by the lender. You can get RV loans starting at $25,000 and repay it over a few year. There are loans available that can go as high as $300,000. They can be repaid over 20 years.
RVs can be fun and allow families to spend time together.
14. Family Loans
Family loans are informal loans that are offered by relatives (and sometimes friends) to help you pay for your debts.
Also, family loans are beneficial because you don’t have to have credit. If a family member trusts you enough to be able to pay the loan, they may lend you the money.
This doesn’t mean you should not take advantage of family members’ generosity. There are online payment calculators and draft contracts that can help with this.
15. Land Loans
There are many reasons why you might want to purchase land. Maybe you’d like to build your home there, harvest its natural resources, or lease it out to other people.
Land loans can be offered in two forms: improved or unimproved. These loans can be used to buy vacant land.
Lenders are more likely to approve land loans because they have higher risk factors. This means that you may pay higher interest rates, down payments, and credit requirements.
16. Pool Loans
If an inflatable pool is not purchased, it is likely that you will need to borrow money to pay for it. The cost of the pool can vary depending on how expensive you want to make it.
A lot of people are interested in boats, RVs, and other loans to support their lifestyle.