In most cases, most people in the United States will have to take on at least one kind of loan in their lifetime. Whether it be a car loan for your first car as an adult, a mortgage for your exciting first home purchase or some loans to help you further your education; loans are a necessity for most of us.
This article will take a closer look at each of the three most common types of loans, and provide some more information about them as well as some tips on utilizing them correctly. These loans can be great, but can also cause you a lot of trouble and heartache if they are not paid back on time, or at all.
Before even looking any closer at these loans, be sure to only take out loans that you can afford to pay back. If you take out a loan with payments that you simply cannot afford every month, you could find yourself drowning in debt and living in a constant state of stress as a result, so be sure to have a budget and stay within it.
Unless you have thousands of dollars of cash on hand to purchase a vehicle, you will need to get a car loan. These loans can be provided by banks, local lenders, and even online lenders are throwing their hats into the mix.
These come in all different shapes and sizes, and are generally easy to get as long as you have an income and are living within your means. Whether you want to pay a certain amount every week, or just make loan payments once a month, there are options for you. Of course, there are more options (and cheaper rates) if you have a good credit score, but there are a ton of options for those with a “less than perfect” financial history.
These vehicle loans can be unsecured or secured, and the interest rates and other terms will often vary depending on if they are secured or unsecured. However, in addition to loan payments, you also need to think about the other costs of owning a vehicle, such as maintenance, insurance, gas and more.
Purchasing a house is a big choice and you have a lot to decide on including where you want to live, what size of a house to buy, which neighborhood to live in, and more. However, another choice you need to be sure to make is which type of mortgage you will get.
We all know that mortgages differ in terms of rate, term and length, but what you might not have known is that there are actually different categories of loans, too. On one hand, there are conventional loans, and on the other, there are government loans.
Conventional loans often require a downpayment and are less flexible, but generally have cheaper mortgage insurance, whereas government home loans (such as a USDA home loan) often require no or a low down payment, are very flexible, but generally have higher mortgage insurance premiums.
While scholarships can help certains students, others rely almost exclusively on student loans to get the chance to further their education. They can normally be used for tuition, food, rent, computer, transportation and other student expenses.
Like other kinds of loans, there are different types of student loans. There are federal loans (both subsidized and unsubsidized) and private loans. Federal loans are generally better and cheaper if you can qualify for them, but if not, private loans are an option.
However, you need to be careful with these loans. Americans owe more than $1 Trillion in student loan debt, spread out over 40 million people. These are staggering numbers that just show how many people utilize these loans. To ensure you aren’t contributing a lot to that statistic, be sure to pay off your student loans as soon as you are able, as some people end up stuck paying off these loans decades after they graduate. To avoid this, consider refinancing or debt consolidation. For instance, Parent Plus loan refinancing is a viable option that offers greater flexibility, a more suitable repayment schedule, and favorable interest rates.