About 65% of surveyed Canadian adults have or have received a personal loan. Some use this to purchase their dream car, whilst others have secured their first home using this money. Loans are a great way to change your life. They help you get something you’ve always wanted but could never afford. Knowing the different types of loans that are available is useful for any loan-seeker.
Read about the top seven types you need to know about below.
1. Payday Loans
Payday loans often get a bad reputation for having high-interest rates. However, they are a great way to secure some much-needed money very quickly. Plus, many of them offer no credit check loans.
Before applying for a payday loan, make sure you will be able to repay. Lending bodies often expect these kinds of loans to be paid back by your next payday. Some people may struggle with this, so it’s always best to check that your finances are in order before applying.
Payday loans work for people with short-term financial issues. Maybe your car needs some emergency work and you simply don’t have the money to pay for it right now. However, if you know you can repay a payday loan the next time you get paid, you can fix your short-term problem reliably.
2. Unsecured Personal Loans
Unsecured personal loans don’t require any collateral. They are generally easier to get if you use a local lending body that knows you will be able to meet repayments. However, if you don’t have a good credit score or a history of paying back the money you owe, they may be harder to get.
If you get an unsecured loan it means that you are considered low risk. Your lender believes what you’re borrowing will earn you enough profit to pay back the loan. That is why they don’t ask for any collateral.
Unsecured loans are convenient because you can use them for anything you choose. As long as you continuously meet the repayments, they are very easy to manage.
3. Secured Personal Loans
As you might have guessed, a secured loan does indeed require collateral. However, they usually don’t have high-interest rates in comparison to unsecured loans.
The collateral you put up against the loan is usually some form of valuable inventory or real estate. This allows your lender to make sure that the loan will be repaid no matter what.
The exact terms and conditions of your loan will depend on who you are borrowing from and what for. You can also negotiate the length of time you will pay your loan back over.
4. Debt Consolidation Loans
Debt consolidation loans are used to help people who are in debt and can’t get out of it. Many people use them to pay off big credit card bills or loans they have taken out that have high-interest rates.
These kinds of loans make it easier to get your finances into order. After you pay off your initial debts, you have just one payment to make to your debt consolidation lender. These usually have much lower interest rates than other loans, making them a little easier to pay back.
5. Student Loans
Likely, you’ve already heard about student loans. They are used to allow adults to go into further and higher education. Many high-school graduates use them to secure their place at university and pay for their tuition.
Student loans are often a topic of interest because they are sometimes difficult to pay back. Former students who have just left university do so with debt that they are not able to repay yet. Despite this, many lending bodies demand that student repayments start as soon as a student has finished college.
The two main types of student loans are private and federal. Private loans require a deep credit check and are sometimes more difficult to repay than federal loans due to higher interest rates.
Federal loans come directly from the government. Changes are currently being made to these loans to make them easier to repay, much to the relief of many students!
6. Auto Loans
Auto loans are used to secure payments for a car. You can get these kinds of loans from lending bodies and car dealerships.
The car you purchase is used as collateral for these kinds of loans. If you can’t meet your repayments, your car will be taken from you and this may also impact your credit score.
However, they are a very useful type of loan if you don’t have the money you need to buy your new car. You will negotiate how much you want to borrow and over how long with your lending body or car dealership.
7. Mortgage Loans
Mortgage loans are what most people use when they decide to buy a home. Because real estate is so expensive, very few people have the money to outrightly buy their own homes. So, they borrow money from a bank and repay it monthly over several years.
When all the repayments are met, your home will belong to you. Generally, you will require a deposit that often ranges between 10 and 20% of the value of your home. You will discuss this with your lending body.
Meeting your mortgage repayments is important, as the house you’ve purchased is used as collateral. If you can’t make your repayments, your lender will foreclose on your house.
You can also find more info on personal loans at kingcash.ca.
Learn More About the Different Types Of Loans
The different types of loans available are great for those wishing to invest in their future. Whether you want a new car, a new home, or an education, there is a loan for you.
There are different kinds of online loans, no-credit-check loans, and fast loans in Canada that will work for you. Always check on your financial health before applying for loans.
Talk to us here as King Cash for more information on all things finances. Whether you want to learn about first-time savings or you’re concerned about your financial health, we’re happy to answer any questions you have. At Kingcash, we want to help you on any financial journey you may be on.
