What Are the Differences Between the Various Loan Types?

If you grew up in the seventies like I did, you probably have a very specific idea of what getting a loan looks like.

You picture going to a bank and filling out a pile of forms, then waiting on the bank to approve or decline your loan. Your imaginary self is probably getting a loan to finance a car or home, or to start a business. Maybe it’s a last resort to get through a tough time.

However, while many banks have retained that very same process, this is no longer how loans have to look. On the contrary, there are a number of different kinds of loans today and they are far easier to get.

The reason for this is that banks are no longer the best place to get a loan. Rather, there are many loan companies that have sprung up around America. Some of these companies are predatory and should be avoided at all costs. But others have really good options that won’t get you into a perpetual cycle of debt.

Aside from providing different kinds of loans on different terms, these companies have better embraced the internet than banks have. You can get some loans immediately with just an online application.

Aside from providing different kinds of loans on different terms, these companies have better embraced the internet than banks have. You can get some loans immediately with just an online application.

If you’re interested in getting a loan for whatever reason, you’ll want to know what kind of loans are available.

Most Common Loans

While you can get a loan for just about anything, there are particular categories that cover most needs and are most popular.

Student Loans

Those who are entering college or have children doing so will know all about the struggle of student loans. There are complicated hoops to jump through to get the best possible option, as well as the specter of long-term debt. It’s certainly not ideal to be starting your career off at a deficit.

However, unless the political reality changes drastically in the near future, student loans are here to stay. Only those who have disposable wealth can afford to pay for college directly. The rest of us have no option but to apply for a student loan.

Student loans do provide better rates and repayment terms than other types of loans, as the lenders understand the position from which the loanees are starting. The best loans are generally federal options. You might qualify for a subsidized loan, which helps put you in the best possible position from the start.

Small Business Loans

Today it is easier to start a business than ever before. For some, starting their dream business requires nothing more than a computer and internet connection. By creating a simple website, you could start getting contracts as an independent entrepreneur. However, many businesses still require capital to get off the ground. For this, there are many different kinds of small business loans.

Going the traditional route with a bank is less than ideal, as the paperwork mounts up and you are offered rigid terms. Consider going with a loan company that offers good loans with reasonable rates. These companies don’t necessarily ask too many questions, as they recognize the idea of a fixed business plan is antiquated in a time in which businesses survive only by adapting.

One of the best options is taking out a business loan with a specialist business loans provider like OnDeck. With OnDeck, you can get through the process in just ten minutes and have the money in your account a day later.

Personal Loans

Personal loans cover just about everything not included in traditional business, student, or asset loans. You can use a personal loan for whatever you need, including medical needs, plastic surgery, once-off events, and to get you through a tough period. Personal loans are generally unsecured, so you do not need any assets in order to apply.

One of the advantages of personal loans is that you can apply even if you don’t know exactly how much you’ll end up using. Costs can build up, and the last thing you want is to get a loan that ends up covering only part of the expenses.

You can even get personal loans if you have bad credit, although you can expect to pay high insurance rates on these loans as you are considered high risk. Nonetheless, if you have a credit history that won’t go away, you can use personal loans to rebuild your score.

A good option for personal loans is SoFi, who have been around for a while and have a very good reputation.

Final Tips

Getting a loan today should look nothing like getting a loan decades ago. While the banks haven’t yet caught up to the twenty-first century, there are many companies out there who will provide the sort of loan you need. Stay away from predatory options, such as payday loans, which put you in a position from which you have a high chance of falling.

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