A loan can be used in various ways, from buying a car to paying the bills or even starting a new business, the options are endless.
The amount of loan you get and the interest rate is determined by your credit history, income, debt, and a few other factors.
There’s a diverse range of loans you can choose from, whether you need finances to help make your life more manageable or want to purchase an essential item.
It’s imperative to acquaint yourself with the types of credit and loans that might be available to you as well as the kinds of terms you can expect.
The proceeds from this type of loan can be used for almost any expense.
You can use it to pay bills or buy a stereo that you’ve been planning to purchase.
Personal loans are often unsecured and can range from a few hundred to a few thousand dollars.
To obtain this loan, you’ll be required to provide some form of income confirmation as proof you can repay the amount you're applying for.
Application for this loan is usually one or two pages in length and only takes a couple of days to be approved (or denied).
This is a loan taken out to fund the purchase or refinance of a motor vehicle.
Typically, these loans are structured as installment loans and are secured by the value of the truck, car, motorcycle, or SUV being purchased or refinanced.
The borrower acquires outright ownership and owns the vehicle “free and clear” once the loan is paid off. Auto loans are usually structured as installment loans which implies that they are paid off in a series of regular payments (typically monthly).
Home Equity Loans
A homeowner can borrow against the equity they’ve built up in their residence by applying for a home equity loan.
This means that the homeowner is taking a loan against a portion of the value of their home.
A great way of determining the amount of equity available for a loan would involve taking the difference between the appraised value of the home and the amount still owed on the mortgage.
A home equity loan can be borrowed for any number of reasons, the most common being debt consolidation, major remodels, and to build additions.
Also, one can take this type of loan to take advantage of possible lower, fixed interest rates.
These types of loans have reasonable interest rates and tend to appeal to individuals looking to borrow large amounts of money because they may be tax deductible. Home equity loan terms typically range from 5 to 15 years.
This is capital that companies borrow to take care of expenses and maintain consistent cash flow.
Business loans can also be applied for by individuals looking to start their own business ventures yet are short on capital.
The borrower can use this loan as they see fit either for capital expenditure, hiring, training, operational costs, construction, or install improvements on their property.
A business loan can range from a few thousand to a few million dollars, contingent on the type and size of the venture.
Types of business loans include commercial loans, development loans, term loans, SBA loans, lines of credit, letters of credit, equipment/fixed asset loans, and corporate credit cards.
These are loans offered to college students and their families to help them pay for education-related expenses like college tuition, textbooks, or room and board at the university.
Someone with good credit and income often applies for this loan and becomes a cosigner with the student involved.
Unlike other types of loans that you may be able to get, the interest rates for student loans are usually lower. There is also a difference in repayment terms, compared to other loan types.
Typically, required repayment occurs after the student has graduated or leaves college.
Mortgages allow a borrower to purchase homes they cannot pay for up front, though a certain percentage of down payment is required.
A mortgage loan is secured against your home, which means that you risk foreclosure if you fall behind on payments.
These loans come with different rates, terms, conditions, and interest payment methods.
Some mortgages will retain a single interest rate for the entirety, referred to as a fixed-rate mortgage and some will have interest rates that fluctuate depending on the market, referred to as adjustable rate mortgages.
A mortgage term can be as little as one year, with most loans lasting up to 30 years.
If you want to borrow any type of loan listed here, Blackhawk Bank can help.
Whether you’re borrowing for individual use or business use, we can help you achieve your goals. Contact us to learn more about our loan options and the requirements for each.