What You Should Know About The Many Types Of Loans
There are many types of loans, and depending on your credit score and history and the purpose of the loan, you should be able to find a loan to fit your needs.
One of the most common types of loans is called a secured installment loan. These are used to finance higher priced items like homes and cars. A bank or credit union will lend you the money that you need to purchase the home or car, and then over a period of time (usually five or six years for cars and thirty years for homes) you will make regular payments or installments.
Normally, the payments will be the same amount and due https://slickcashloan.com at the same time every month, and by the end of the loan term, you will have paid off the loan and the interest. There are, however, exceptions to this type of loan structure especially in the mortgage industry. Some mortgage loans have been set up so that the lendee pays a set amount every month for a short period of time like two to ten years. During this time frame, they only pay interest on the loan, and when the term is complete, they owe the balance which is called a balloon payment.
This type of loan is only feasible when house prices are constantly rising because if the house price falls then the borrower’s balloon payment will be much more than they will be able to obtain by selling the home. There are other vagaries in the home mortgage market like ARMs, or adjustable rate mortgages, where the lender’s interest rate changes two or three years into the loan.