Loans play a crucial role in helping you meet financial requirements such as college education, purchasing a car or a home, and emergencies. You can obtain a loan from a bank, credit union, or an online lender. There are several loans available that can be used by commercial or business establishments, such as SBA loans, equipment loans, working capital loans, and term loans. They are the best option for financing business plans. 

Loans can be easily availed by anyone. But before you borrow money from any financial institution, it is important to compare the interest rates and terms offered by various lending institutions to get the best rates.

Types of loans

Personal loan
Personal loans can be availed for a number of reasons that include home renovations, weddings, debt consolidation, vacations, and much more. Choose from a wide variety of personal loan options to help you to meet your financial needs. A personal loan is a perfect way to get the cash you need without paying a large amount of interest. Be aware of the extra credit card charges and late fees. 

Personal loans can be categorized into two – secured and unsecured loans.

Student loans
If you are planning to pursue higher education, then you should consider securing student loans. There are two types of these loans- federal and private student loans. Federal student loans come with more benefits and protection but have higher interest rates. To secure them, you need to fill in a free application for Federal Student Aid. You can contact your educational institution’s financial aid department for the application and details. 

If you have good credit, you can qualify for private student loans. These loans offer fewer benefits and protection, but with a good credit card, you can qualify for better rates. Securing private student loans enables you to pay tuition fees and living expenses at accredited schools across the country. However, you cannot use it to pay for specific types of education, such as computer coding or graphic classes.

Home equity loans
A home equity loan, also known as a second mortgage, is a great way to use your home’s equity to get a bigger line of credit without having to put any money down upfront. You may be able to borrow nearly 85% of your home’s equity and secure a repayment plan that could span anywhere between five and thirty years, depending on your financial situation. However, if you already have a mortgage on your house, the interest rates are likely to be higher than a traditional mortgage, and the repayment process can be lengthy and difficult.

Mortgage loans
Banks and credit unions mostly offer these types of loans. However, there are some government-assisted mortgage loan programs that are available too. To avail of the government programs, you need to meet certain criteria as these are usually for low-income families, active-duty service members, and veterans.

Auto loans
These are a type of secured loans that are used to buy a vehicle. The repayment terms vary, and the period could be between three and seven years. The collateral for an auto loan is the vehicle itself, which means if you cannot repay the loan, the lender will take charge of the vehicle. Auto loans can be secured from banks, credit unions, online lenders, and car dealers.

Payday loans
These are short-term loans that are not credit-based. They are available at high finance fees, and the repayment plan is till the next paycheck. If you exceed the limit, you need to pay higher fees.

Title loans
These are secured short-term loans where you need to pledge the title for your vehicle as collateral. The loan limit is within 25% to 50% of the value of the vehicle, which the lender evaluates. The repayment option typically is only up to 30 days.

Small business loans
Several types of small business loans include small business administration, equipment, working capital, and term loans. They are useful for startups and small businesses like family-owned enterprises. They are the best option for financing business plans.

Land loans
Land loans are of two types, namely improved and unimproved. The former is used for land ready for construction, whereas the latter is for vacant land. Land loans have higher interest rates, stringent down payment options, and credit requirements compared to other property loans.

Family loans
These are informal loans that family and friends can secure. Draft and sign a loan agreement that includes interest payments, due dates, and late fees.

Before approaching a lender, it is important to comprehend what type of loan you need. Additionally, research and compare the interest rates to get the best deal.