Đang chơi bàiLoans provide you with money you might not currently have for large purchases and let you pay back the money over a certain period of time. There are many types of loans available, such as home loans, car loans, and student loans for higher education expenses. Loans are divided into two categories: secured and unsecured.
With secured loans, your property and things you own are used as collateral. If you cannot pay back the loan, the lender will take your collateral to get their money back. Common secured loans include mortgages, home equity loans, and installment loans.
Đang chơi bàiA mortgage represents a loan to buy a home. Fixed-rate and adjustable-rate mortgages are the two main types of mortgages, but there is a wide variety of mortgage products available. Sources for mortgage loans include mortgage banks, mortgage brokers, banks, thrift and credit unions, home builders, real estate agencies, and Internet lenders. When shopping for a home mortgage, you should consider contacting several lenders or brokers to compare offers.
If you miss your mortgage payments, foreclosure may occur. This provides the legal means for your lender to repossess your home. Foreclosures have a negative impact on your credit history. Beware of predatory loans: abusive and deceptive mortgage lending practices that strip borrowers of home equity and threaten families with foreclosure.
- For more information on mortgages and home buying, refer to , a guide by the U.S. Department of Housing and Urban Development (HUD).
- The Federal Trade Commission (FTC) provides tips on .
Home Equity Loans
A home equity loan is a form of credit where your home is used as collateral to borrow money. It's typically used to pay for major expenses (education, medical bills, and home repairs). However, if you cannot pay back the loan, the lender could foreclose on your home.
Đang chơi bàiThere are two types of home equity loans:
- Lump sum. A one-time, closed-end loan that usually has a fixed interest rate.
- Revolving line of credit. You can withdraw the funds at any time for more flexibility. These usually have adjustable interest rates.
Đang chơi bàiFor further information about home equity loans, refer to , a guide by the .
Đang chơi bàiWith an installment loan, a borrower repays the loan over time with a set number of scheduled payments. Home and car loans represent the most common installment loans. Before you sign an agreement for a loan to buy a house, a car, or other large purchase, make sure you fully understand all of the lender's terms and conditions, including:
- The dollar amount you are borrowing.
- The payment amounts and when they are due.
- The total finance charge, including all interest and fees you must pay to get the loan.
- The APR, the rate of interest you will pay over the full term of the loan.
- Penalties for late payments.
- What the lender will do if you cannot pay back the loan.
- Penalties if you pay the loan back early.
Đang chơi bàiThe requires lenders to provide you this information so you can compare different offers.
Đang chơi bàiUnsecured loans do not use property as collateral. Lenders consider these as more risky than secured loans, so they charge a higher rate of interest for them. Two common unsecured loans are credit cards and student loans.
Credit cards allow you to pay for products and services now, but you need to repay the balance before the end of your billing cycle to avoid paying interest for your purchase. A credit card company sets a credit limit on how much you can charge on your card when it issues the card to you. When applying for credit cards, it's important to shop around. Fees, interest rates, finance charges, and benefits can vary greatly.
For further information on choosing a credit card, visit:
- The Federal Trade Commission's (FTC) .
- The Consumer Financial Protection Bureau’s (CFPB) .
Student loans are available from a variety of sources, including the federal government, individual states, colleges and universities, and other public and private agencies and organizations. To help pay for higher education expenses, students and parents can borrow funds that must be repaid with interest. As a general rule, federal loans have more favorable terms and lower interest rates than traditional consumer loans.
- The U.S. Department of Education explains the .
- The Consumer Financial Protection Bureau's (CFPB's) lets you compare financial aid offers from multiple colleges.