Most of us tend to think of loans only when we suddenly need money. And so we focus on a very specific loan type based on our immediate requirement, instead of thinking of the variety of loans that are available and whether a different type of loan may be more beneficial for us. So it may be wiser to learn about the different types of loans available, the terms and conditions, eligibility criteria and penalties before you decide on which one to apply for.
The most basic aspect of loans is that they are governed by state and federal guidelines that have been established to protect us, the consumers, from any escalation in interest rates that were not agreed upon at the time of taking the loan. This also entails adhering to default terms.
Different types of loans usually have specific end uses. They are influenced by variables such as the duration of the loan period, interest rate calculations, payment due dates and of course, the credit score of the borrower. So it may be a good idea for you to ensure a healthy credit history before applying for a loan.
The most common types of loans include: