Though the best way to pay for something you want, is with your own cash, it goes without saying, that sometimes you just don’t have it. Loans are financial products, that for eligible applicants, can prove beneficial in their professional and personal lives. If borrowed responsibly, loans can help people to achieve goals that would take them years to accomplish with their own cash. Below are 7 types of loans and their uses.
1. Short-Term Loans Can Help Get You Out of a Quick Jam
Small financial emergencies are common. Something like a car that suddenly breaks down or a spike in your utility bill could require more cash than you have to take care of. Short-term loans like installment loans, can be taken advantage of by individuals or business owners who don’t have the necessary credit history to apply for a more traditional personal loan. Short-term lenders tend to have more flexible eligibility requirements, quick approvals, and flexible repayment options making it easier for borrowers to pay within their budget. Short-term loans can be great for:
- Unexpected bill
- Car repair
- Home emergency
- Small debt
- Pay day relief (Those instances where you just need some cash to tide you over until you get paid)
2. Personal Loans for Miscellaneous Goals
Personal loans can be used for just about any personal need you may have. They can be obtained from a traditional bank or online through various private lenders. The terms and conditions of the loans will vary by provider, your credit worthiness, and your ability to repay the loan. Personal loans can be borrowed for a duration of 12 to 36 months. They can be great for:
- Paying down debt
- Home improvement project
- Planning a wedding
3. Student Loans for Higher Education
The average cost of a college education is upwards of $25,000 per year. As the average household doesn’t have that kind of money saved up, student loans can be beneficial in helping college-bound students to obtain a higher education. Student loans are loans provided by private institutions as well as the federal government to applicants looking to attend college. Most loans allow for students to start repayment after graduating.
4. Mortgages for Purchasing a Home
Homes costs tens of thousands of dollars which the average person doesn’t have. Mortgage companies are banks and other private financial institutions that are willing to provide you with the means to purchase a home. Qualified applicants are able to purchase a home with the promise to repay the mortgage typically over the course of 15 or 30 years.
5. Auto Loans for Purchasing Vehicles
Another common purchase that may be difficult to obtain the cash for all at once is a car. Dealerships, banks, and other financing companies provide loans to eligible applicants that allow them to purchase the car. The loan will pay for the expense of the car excluding taxes and licensing fees. Borrowers are expected to repay the auto loan typically within 12-60 months with interest.
6. Business Loans for Starting a Dream
Starting a business requires one key element – cash. Whether you’ll be running the business from your home or in a small commercial space, there will be a lot of overhead costs you’ll need to have upfront. From equipment and software to utilities and operational costs, starting a business can require hundreds or thousands of dollars. Small business loans can help applicants to start the dream without digging so deep into their personal budget.
7. Business Lines of Credit for Miscellaneous Needs
Throughout the operation of a business the need for more cash is imminent. Whether it’s to pay a new employee, handle the influx of consumer demands, or to stock up on inventory, applying for a new business loan every time can get out of hand. Business lines of credit provide a lending/financing option for business professionals. A loan that you can borrow from as long as you’d like, businesses are approved for a line of credit. They can use all of these funds or a portion of the funds as many times as they’d like as long as they repay the money.
Both personally and professionally, people need financial assistance sometimes. Loans essentially provide them with the money they need upfront to purchase the things they may need or want. When shopping for loans, review the types of loans to determine which is best for your financial circumstances. Lastly, remember to repay the loans timely so that you can continue to rely on this financial assistance should you need it in the future.