Everyday all manner of people find themselves in need of a loan. There are all kinds of reasons why a loan may be needed. The reason for the loan may be a large factor in determining what loan is right for an individual. Some common reasons for taking out a loan include school expenses, home repair, business investments, and covering short term needs. For each of these needs there is a specific loan:
Several considerations need to be made, such as: What is the purpose of the loan? And is the borrower’s credit suitable for the loan?
School expenses- Paying for a post-secondary education is expensive. Student loans are a very common way of covering these costs. Student loans offer very low interest rates and are generally tax deductible. In some cases, with some loans, the interest is even deferred until the repayment period begins.
Home repair- Sometimes general repairs are necessary on a home and using the equity within the home is an effective way of accessing capital to make those repairs. A home equity loan often has very attractive rates and it too can be tax deductible. A home equity loan can be used for any reason, nit just home repair, and can often be an excellent secured loan to meet almost any need.
Business investments- A small business may occasionally find itself in need of capital. Small business loans are used specifically for business needs and can provide the pool of capital needed. The rates on these loans vary depending upon the creditor. If credit may be a problem at some institutions, the Small Business Association (commonly known as the SBA) lends through many dealers. These loans have looser credit requirements.
Short-term need- Sometimes no matter how well anyone prepares for it something happens and the money to fix it is just not there. The car breaks down, the kids need to go to the doctor, or the water heater needs repair. Unfortunately the money is not always available and the bill needs to be paid right away. Payday loans are designed to cover short-term needs. These loans usually do not take into account credit history so bad credit is not a problem. The rate and fees can be very high however, making this really an ideal option only for short-term needs.
All of these loans have there purpose and appropriate uses. If an individual has had problems in the past, however, the options may be limited. A payday loan, as previously stated, does not usually require a credit check. Bad credit loans are also reserved for those borrowers with less than perfect credit. They offer flexibility for those with poor credit, but again, expect a higher interest rate and high fees.
So whatever the need, whatever the credit circumstances, there is a loan program for everyone in the event of need. Consider carefully what the loan is to be used for and the credit situation of the borrower before applying for any loan. Some loans. Like the student loan and the home equity loan, come with low rates and tax advantages, other loans, like the small business loan, are for specific needs, and then there are loans for immediate needs and less than perfect credit, like payday loans and bad credit loans.
Everyday people find that they need a loan. A few considerations up front will help make the loan decision simpler, and insure that the appropriate loan is applied for.