Reasons You May Need to Take Out a Loan

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People take out loans for a variety of reasons. They may want to buy a home, purchase a vehicle, consolidate debt, do a major home repair, pay for college tuition or pay for an unexpected expense.  Whatever your reason there are many different loans available, some secured and some unsecured, and some for good credit and some for bad credit. 

Less Than Ideal Credit, Short-Term Loan

If you have a few late payments or even a missed payment or two, your credit score becomes less than desirable to traditional lenders. Thankfully, there are other loan companies such as Maxlend Loans, which bases their decision on whether or not to fund a loan on more than just your credit score. Because of this, you are able to acquire a short-term loan for a few thousand dollars, to cover a car or home repair or an unexpected illness. Unlike Payday loans where you repay the entire loan within just a few weeks, these types of loans give you several months and some up to two years, allowing you to make small, affordable monthly payments.

Car Loan

Car loans are among the most popular loans available. They are relatively easy to acquire, even if you have less than perfect credit since they are a secured loan wherein the vehicle serves as the collateral. The only difference between having good and poor credit is the amount you will need to put down and the interest rate.  Just make sure that if you purchase a used vehicle that you consider taking out the loan for a shorter term. Otherwise, you may find yourself owing more than what the vehicle is worth quickly. 

Personal Loan

You can acquire a personal loan from a few thousand up to $100.000. Personal loans are attractive to many people because they provide a way to pay off debt, purchase a vehicle, make home repairs, pay school tuition or medical bills. Personal loans can be either secured or unsecured depending on the lender requirements. In most cases, the unsecured loans are harder to get an approval on due to the fact that they have no collateral to recover and because of this, the interest rate is also higher. Banks generally base their approval on your income, debt-to-income ratio, and your credit score. 

Mortgages

Most people who make the decision to purchase a home need to take out a loan to pay for it. There are a variety of mortgage loans available. The federal government ensures some of the loans like an FHA, VA, and USDA / RHS. While others, like the conventional fixed or adjustable rate mortgages, receive financing through banks. If you are a first-time home buyer an FHA gives you a way to get into a new home without the need for a lot of upfront monies. The same goes for a VA loan, with the other difference being that you must be either an active serviceman/woman or have served at one time in your life. If you have the 20% required by traditional lenders, a conventional mortgage offers a low-interest rate with an option of a fixed rate of an adjustable rate. If you decide to get a conventional mortgage and have less than the 20% down payment, you will have PMI insurance imposed by the bank which can add a few hundred dollars more to your monthly payment. 

Student Loans

Student loans give young adults a way to afford to go to college. Many students opt for a loan through the federal government because they can hold off making payments until they finish school entirely. These types of loans are available subsidized or unsubsidized. The unsubsidized loans are very common because they are easy to acquire even if you have a low credit score. The amount is less than a subsidized, capping out at just over $30,000. for students who live at home. Because of the limit on the amount that students can borrow, many must also take out loans from a private lender for their remaining years. 

There are many reasons people need to borrow money and take out a loan to do so. Luckily, there are many different types offered whether you have good or poor credit.

 

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