What Types Of Loans Will The Modern Consumer Encounter In Their Lifetime?

What types of loans will the modern consumer encounter in their lifetime? "The possibilities here are endless," Reed said. "Most people will have student loans, consumer loans, auto loans and house loans which are known as mortgages.".

If funds are low there are loans available for almost any need. Each of us will eventually encounter the need for one of these loans at some point in our lives. Anne Reed of Acceptance Mortgage in Sparta, New Jersey has some advice about different kinds of loans.

"The possibilities here are endless," Reed said. "Most people will have student loans, consumer loans, auto loans and house loans which are known as mortgages."

If the particular type of thing you need money for does not fall into a specific category, there are even loans available that tell the bank to mind their own business, known as personal loans.

Student loans are used to pay for college tuition whether you are an undergraduate or pursuing a higher degree. Student loans can be obtained through the Federal government and have low interest and no need for credit checks or collateral. An auto loan will help you to purchase a car, but if you default on your payments you may find a tow truck in your driveway to repossess it. Auto loans use your new vehicle as collateral.

A line of credit is another kind of loan. You can get lines of credit for furniture, appliances, clothing, and almost any consumer product you can imagine. Lines of credit give you a specific amount (or limit) that you can spend and when you repay the balance you can reuse the credit again.

Mortgages or home loans are very popular as the price of a home is usually too extreme for a cash purchase. "In the last 15 years or so, the mortgage industry has come out with some amazing products," Reed said. "There are mortgages that have fixed rates and mortgages that have adjustable rates. There are mortgages that require that you pay only interest and there are mortgages that require you make principal and interest payments. There are mortgages that give the borrower 4 different options to pay every month - fully amortized fixed 30 year payment, fully amortized fixed 15 year payments, fully amortized interest only 30 year payment or non-fully amortized payment."

Mortgages can be a complicated business and it's a good idea to learn as much as you can about them before choosing one. Your home is usually the collateral when you take out a mortgage and the home can be seized by the bank if you fail to keep your end of the agreement. Home equity loans are loans which use your house as collateral.

"There are home equity loans and home equity lines of credit," Reed said. "Loans have set and specific payment periods and amounts where lines are more like credit cards where the loan amount becomes available to you again and again as you borrow and repay."

You can use home equity loans for anything from college expenses to home improvements. Some people use home equity loans as a way to consolidate high interest credit lines and loans because the interest can be much lower.

Personal loans are available through your local bank. A person usually needs to have excellent credit to obtain a personal loan or they will undoubtedly be paying a very high interest rate. Personal loans are great for when you need a bit of money to get through a rough patch or to pay for unexpected expenses.

Whatever type of loan agreement you enter into, you will be legally obligated to repay the money in the specified amount of time. Failure to pay the money on time can hurt your credit rating and disqualify you from loans in the future.

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