Many of the existing bank companies today offer a wide array of loan options for people of all age groups to help aid their financial needs under different conditions. Among the most common types of bank loans are home equity loans, business loans, personal loans, auto loans and student loans.
Typically, there two types of loans that can be obtained. First is secured loan in which the borrower has to pledge certain of its assets as collateral for the loan, and second is unsecured loan which does not require any collateral and is lent based solely on the borrower's credit rating and trustworthiness.
Now let's take a closer look into these various bank loan options:
Home Equity Loan
Homeowners within the average income group will often opt for these home equity loans and lines of credit when they are buying a new house or wanting to secure their existing property. Through this loan, homeowners are basically borrowing against the equity of their homes which sometimes can be as much as 125% of the equity value. However, borrowers should be extremely aware of the consequences of not being able to keep up with the mortgage loan payments before applying for one. You could risk losing your house if you fail to repay the loan in time.
In terms of a loan, the interest rate, payments and duration are fixed, whereas in a line of credit, borrowers are allowed to access an extended fund provided by the bank at any given time (up to a certain limit) that they need to and repayment terms are based on the current market condition.
Business loans are commonly used in business financing when a company requires an extra cash flow to maintain or expand its business. A company must be legally registered in order to apply for a business loan and the business owner is also required to guarantee the loan.
A personal loan is a form of unsecured loan or also known as a signature loan where no collateral is required. Usually those who are qualified for this loan have strong credit rating and histories, thus they are assumed to be capable of repaying the loan in time. Interest rates for this sort of loans however, will often be higher. People with bad credits may also apply for similar type of loans.
Student loans are insured by the federal government and banks that offer such loans often require a cosigner as a guarantor who agrees to repay the loan in case the student defaults. Submit a form via the FAFSA (Free Application for Federal Student Aid) if you would like to apply for a student aid.
Though not commonly heard of, church financing and lending are given with special arrangements and terms designed to aid churches in their construction, expansion and facilities improvement as they are built for religious and non-profit purposes.