Loan contracts come in various forms and terms. In reality, it will range from a simple IOU between friends and family to more complex loans such as auto loans, payday loans, home loans, and student loans. Regardless of its type, each loan will be governed by policies and guidelines to protect clients from unfavorable practices such as excessive interest rates. In addition, the duration of the loan, as well as the predetermined terms, must be clearly detailed to avoid confusion or possible legal action.

In case you need money for a very important item or perhaps to help make your life more manageable, it is imperative that you are familiar with all the types of loans you can access on the different terms you can expect. .

Different types of loans

There are different types of loans that have a certain intended use. They can vary based on the time period, when payments are due, the way interest rates are calculated, and a host of other factors.

mortgages – These are distributed by banks to allow consumers to buy homes they cannot afford upfront. This will be tied to your home. This also means that if you don’t pay it, your property will be foreclosed. Unlike any other type of loan, this one has the lowest interest rate.

Pupil – These are offered to college students along with their families to help cover the cost of higher education. In general, there are 2 main types of student loans: those financed by the government and those from private lenders. Experts say that the first option is better as it comes with much lower interest rates and better payment terms.

Staff – These can be used for any personal expense. This option does not have a specific purpose. It is for this reason that many are drawn to apply for such. The terms of this type of loan will largely depend on your credit history.

Small business – This is often awarded to entrepreneurs or aspiring entrepreneurs to help them establish or expand their businesses. Small business loan options will largely depend on the needs of your business.

car or car – This is quite similar with mortgages in that it is tied to your property. They will help you pay for a certain car; however, you will risk losing the car when you don’t make the payments. Car or vehicle loans can be offered directly by a bank or by the car dealer. Although those offered through a dealership are somewhat convenient, keep in mind that they generally cost more.