If you are in need of immediate cash, then you might have already thought of availing a cash loan. But what are the different types of loans and what type of loan is best for you? It is good to know the different types of loans so that you will know the period of loan, the interest rate as well as other variables affecting your loan. So if you are looking forward to obtaining a loan, make sure that you consider the different types of loans and what will best address your problem. Take into consideration the period of payment as well as the interest rate thereof.
1. Student Loans
From the name itself, student loans are offered and granted to college students as well as to their families in order to help cover the expenses for their education. Student loans come in two forms: private student loan and federal student loan. The latter is offered by private groups and individuals whereas the federal student loans are offered by the government. The latter is the better choice since they offer lower interest rates, but they may come with tons of requirements.
2. Small Business Loans
It is important to choose your small business loan from reliable sources including the U.S. Small Business Administration (SBA). This type of loan is granted to aspiring entrepreneurs who want to start-up a business or those who wants to expand their already existing business. Small business loans may have a number of requirements, which includes presentation of your business proposal and its possible return. You may have to show them how to process payroll and whether you are outsourcing small business payroll. Even the little details of your business might be asked so be ready for it.
3. Auto Loans
This type of loan is usually offered by traditional financing institutions like banks, cooperatives and auto dealership centers. They help you get the car of your dreams, but you run the risk of losing the same in case of non-payment. While this is a very convenient set-up, the same may carry high interest rates.
4. Personal Loans
If you don't have any designated purpose for your loan, you may obtain a simple personal loan. You can apply the same for your already due credit card or if you want to apply the said loan for your personal interest. Whatever the case is, this type of loan may also be a convenient loan, but it also carries higher interest rate. The chances of being approved of personal loan may also depend on your credit standing and credit history.
5. Payday Loans
If you are seeking for a short-term loan to address any immediate need then you may avail a payday loan usually offered by private individuals. Although this may help you fill the gap about the expenses between your payday check, this may entail higher interest rate. Payday loans may give you immediate solution, but this type of loan is actually discouraged by the government since it entails higher interest rate.