Written by: Josh McFadden | Best Company Editorial Team
Last Updated: September 11th, 2019
Need money to finance one of life's many major needs or purchases? Unless you are the fortunate heir to a large sum of money or you find yourself in the enviable position of being independently wealthy, you're probably going to need some help paying for things such as a new home, major home repair, schooling, or major medical need.
Thankfully, there is a lender near you ready to help you out.
Unless you have very poor credit-or no credit history or stable income- you should be able to qualify for a loan to give you a hand. Whether it's to pay for something you desperately want or need, or whether it's to give you a hand in a big pinch, loans are available to help you.
In addition to personal loans, which can help you pay for any number of things, there are a few other types to help you out regardless of your situation of station in life. Here are few besides personal loans:
Remember when you were a child in school and your parents begged you to get good grades? They weren't just saying this so you could achieve something and they could brag to their friends about how smart their kids were. They were hoping you would get a scholarship. And why not? School is expensive. The average undergraduate tuition at a U.S. public university is more than $9,000 a year. A graduate degree can be three or four times as much. If you don't get a scholarship or a qualify for a grant, a loan is the only option for many college-goers.
Student loans typically have a low-interest rate and will cover the cost of tuition as well as room and board in many cases. Many student loans are sponsored by the U.S. government; others are privately sponsored. Interest will not accrue while the student is in school, nor will the student have to pay back the loan while enrolled in courses seeking a degree.
One key difference between student loans is that they can be granted regardless of credit history or income. This is the source of much criticism.
If you can purchase a home with cash, consider yourself lucky and in the minority. For the rest of us, there are mortgage loans.
Mortgage loans are granted based on the applicant's credit history and score, income, and employment status. The rate is predicated based on the these factors, and the terms are usually set in 15- or 30-year periods.
Most mortgage loans require a down payment of anywhere between 5 percent and 20 percent. Applicants who can only provide a small down payment often are subject to mortgage insurance, which protects the lender in the event the borrower defaults on the loan.
Loan rates are largely subject to market conditions, which can vary greatly from month to month and year to year. Because these loans are secured, the borrower attaches collateral to it, in this case, the property itself. Thus, in the case of a defaulted loan, it is foreclosed and the home is possessed by the lender.
Auto loan rates are generally a little lower than mortgage loans and are paid back over a three- to six-year term.
Again, qualification is based on income and credit. This type of loan is also secured, meaning if you fail to make your payments, the lender can take possession of the automobile.
If you are a small-business owner, you may apply for a business loan to get your business off the ground, to help it grow, or to help build up infrastructure or purchase supplies and equipment.
Business loans take into account one's business credit and sometimes even personal credit. Defaults on business loans may result in bankruptcy of the business or even consequences for personal property.