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If you are new to the world of finance, loans, and borrowing it can be hard to work out what you should be doing with your money. In fact, there are many untrustworthy companies that make a lot of money from people making the wrong choices when it comes to their finances.
We’re here today to help you make informed decisions about what type of loan you should be taking out. We will be covering the 7 most common types of loans and talking you through who they are best suited for.
These 7 loans are:
- Mortgages
- Instant cash loans
- Car finance
- Student loans
- Medical loans
- Debt consolidation loans
Continue reading to find out more:
Mortgages
If you are looking to buy a property then you will want to look into getting a mortgage.
Mortgages are large loans that are paid back over a long period of time and they tend to have low interest rates.
The amount you can borrow from a mortgage company will be affected by three things. How much money you have saved up, how much money you earn, and what your credit score is. Make sure that you do an extensive research on mortgage financing.
You will need to make an application for each house you are interested in buying.
Some mortgages will only require a 5% deposit, while others will ask for a 10-15% deposit.
Instant cash loan
According to CreditNinja, instant cash loans are best for people who need cash quickly.
Instant cash loans are small loans that are paid out quickly and paid back quickly. They are also known as payday loans in other parts of the world. They are called this because they are designed to keep you afloat until your next payday arrives.
Interest rates can be quite high on Instant cash loans, but the less time you borrow the money for, the less interest you will pay. Having a good credit score can also reduce the amount of interest you have to pay on a loan.
Car finance
Car finance loans are designed to help people afford cars when they cannot buy one outright.
This type of finance is usually offered directly by car sales companies. You will be allowed to pay off the price of the car over an agreed amount of time. Interest will also be added to the payments. When the amount is fully paid off the borrower will own the car. If they want to change the car before they have paid it off then can sell it back to the salesman.
Getting finance for a car is much better than taking out a short term loan for one.
Student loans
Student loans are loans that pay for education.
If you cannot afford to pay for your tuition (at any level of education) then you can take out a loan. The loans tend to be large and are paid back over a long time. Because they are paid back over a longer period, student loans tend to have a lower interest rate. The money is usually paid directly to the institution.
There is usually a fine for paying back your student loan early. You can get both federal and private student loans.
Your student loans should not affect your credit score.
Medical loan
Most of the time medical insurance doesn’t cover the whole cost of treatment or a stay in hospital. This is why medical loans were developed. These types of loans allow you to borrow the remaining cost and the company will pay it directly to the hospital.
Getting a medical loan is far better than defaulting on your medical bills. A far too large group of Americans are forced to declare bankruptcy because of medical bills every year and do not explore the possibility of medical bill consolidation services.
Medical loans can range from short term to long term loans and tend to have a lower interest rate. The process is quite simple and the money is paid out quickly.
Debt consolidation loans
Anyone who has multiple loans outstanding should look into debt consolidation loans. They allow you to consolidate your loans into one monthly payment.
This can benefit most people in two ways.
Firstly, the monthly payment of a consolidation loan is usually smaller than the monthly payments of all the debts combined otherwise.
Secondly, they can have interest rates that are a lot lower than other types of loans.
This could result in you paying back less money every month and saving money on your interest rates in the long term.
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