Applying for a loan is easier than ever in today’s online world. It’s also more accessible than ever to apply for and accept a loan that might not be the best fit. Dutton Lending, a company that offers personal loans online, helps people find the best fit for them so that they aren’t paying more than they should.
What are some of the different loans out there for people to apply for? By knowing the different loans and also terms that go with the lending process, smart decisions are possible.
The Seven Main Types of Loans
With so many different types of loans, almost all of them fit neatly into seven types.
Mortgage Loan
A person takes out a mortgage loan if they are trying to purchase a home. This is one of the largest loans someone takes out in life. Most only apply for a mortgage once they have a considerable amount of credit built up. Mortgages also require a down payment for approval in nearly every case.
Even though part of the process happens online with some lenders, most people still traditionally apply for mortgage loans. Since a lot goes into applying for this amount of money, it’s trickier to do that through an online lender.
Hated Paper Money
(and corporations and national banks)
Student Loan
A student loan can either be a federal, state, or privately issued solution. It’s meant to cover education-related costs. This can include tuition, room, board, and other miscellaneous expenses.
Applying for a student loan is straightforward, and approval isn’t incredibly challenging. The problem a lot of people run into is the repayment process right after graduation. Since most recent graduates don’t make much money right out of school, it can seem like a long process to get everything paid back.
Auto Loan
It’s not quite as big as a mortgage loan, but an auto loan is used to finance a new vehicle. A lender or dealership handles an auto loan. Many auto loans are now easy to start online, and they come with competitive rates.
Shopping around for an auto loan is smart to do with so many variables changing rates. There’s an opportunity to get an auto loan for as short as two years or as long as seven years.
Small Business Loan
Entrepreneurs love the idea of taking a small business loan if they are approved. They can be available from banks, credit unions, online lenders, and more. To land a reasonable amount, a business needs to be a sole proprietorship, a limited liability company, or a small corporation to land a reasonable amount.
Pawn Shop Loan
This is an older type of secured loan where someone puts up a piece of property for money. After borrowing the money and paying it back, they can get the property back. The shop can sell the item if someone doesn’t pay the money back in the allotted time. Taking a pawn shop loan out is always risky, but it’s been around for a long time.
Payday Loan
People count on a reliable check from their work weekly, bi-weekly, or monthly. A payday loan is there for an advance if necessary. A payday loan is usually pretty risky since the fees can easily double or even triple the amount borrowed. The average APR can get as high as 400%.
Personal Loan
A personal loan is one of the most versatile loans out there. There’s a reason why they continue to become more and more popular both traditional and online. Some companies call everything a personal loan, while others will break them up into several categories.
A personal loan works for building credit, debt consolidation, home improvements, vacations, weddings, major expenses, and more. They come in unsecured and secured options, with an unsecured loan being more challenging to obtain. Depending on a person’s credit score, an unsecured loan becomes expensive.
On the other hand, secured loans are easier since collateral is put up to lower the risk for lenders. As long as a person pays their loan back, a secured loan is the way to go. However, there is the risk of losing property put up as collateral if the loan isn’t paid.
Terms To Know Before Taking Out a Personal Loan
If a personal loan sounds like the perfect fit, understanding some of the terms will make life a lot easier. The versatility of a personal loan from a company like Dutton Lending makes it a very good idea. However, there’s still an opportunity for people to make poor decisions when rushing to get one.
Interest Rate
There’s an interest rate percentage that comes with every loan offer. They factor in credit score, credit history, debt-to-income ratio, and more.
Fees
Make sure to look out for additional fees. Even if the annual percentage rate is low, high fees could ruin the deal.
Funding Time
If funds are needed quickly, it’s essential to pay attention to the funding time of the loan. Dutton Lending prides itself in offering one of the fastest funding times possible. It might take a week or more to get funds in more traditional settings.
Term
The term of a personal loan explains how much time someone has to pay it back in full. Failing to pay it back during that term can result in extra fees, penalties, collection agencies, and more.
Why The Right Loan Matters
Dutton Lending offers a variety of loan options based on what a person needs. Applying for the right type of loan ensures that a person gets the best rate possible.
Some people don’t want to worry about applying for a loan in a traditional setting. Instead, they’d go to a website and fill out as much as possible. Dutton Lending makes it easy enough that a person doesn’t even have to talk to or see anyone to get the money necessary.
Fill out the paperwork, select the correct type of loan, and wait for a decision. The loan process is set up and ready to go in virtually no time.
