Are you thinking about taking out a loan? Most people borrow money for costly assets such as a house or car or to pay for the education they need to pursue their dream career. If you’re thinking about taking out a loan, it’s helpful to know the different ways you can finance your dream.
You’ll need to apply for either a secured loan or an unsecured one, depending on whether you have anything of value. A secured loan allows the bank to take an asset from you should you stop making payments. This is common for both a mortgage and a car payment. If you fail to pay, the bank takes these assets from you.
If you have nothing of value, you can still apply for an unsecured loan by contacting MaxLend, although the interest rates will be higher.
Here are some of the types of loans available.
A Loan for Your Car
You can take out a loan for a new car, or one that’s new to you. You’ll only be able to borrow as much as the Blue Book value of the car, so make sure you’re getting a fair deal before committing to buying. This type of loan is a secured loan, and the bank will repossess your car if you fail to make your monthly payments.
A Mortgage for Your Home
A home is likely the most expensive asset you’ll ever obtain, and few people have enough saved to pay for a home outright, so you’ll have to take out a loan for your home, also called a home mortgage. You can obtain a loan with a fixed rate, meaning the interest rate stays the same for the duration of the loan.
Or you can get a loan with a rate that’s low for a couple of years and will then adjust to the rate set by the Federal Reserve. This type of loan is called a balloon mortgage because it tends to balloon up after a few years.
A Loan for Your Business
If you’re starting a company or you want to expand the business you already have, taking out a loan is a good way to get the needed funds. You’ll have to apply for a secured loan and use either the equipment or the accounts receivable as collateral.
A Personal Loan
It’s smart to save money on a regular basis and place that money into an account you never touch except for emergencies, such as a surprise car repair or unexpected medical bills. Typically personal loans are unsecured, meaning the interest rate will be higher than with a secured loan.
A Cash Advance
If you need money to tide you over until that next paycheck, you can apply for a cash advance. Keep in mind that the interest rate on such loans can be extremely high. You’re better off borrowing from family if you can.
Sometimes a loan is necessary, but take a hard look at your budget and cut back on nonessential expenses to avoid requiring such a loan in the future.
