When it comes to loans, you might as well be talking about flavors of ice cream. There are all kinds of different colors, flavors, and sizes. Some of them have a huge interest, and some of them are fairly low interest. When looking for the best loan for you, decide whether it’s in the interest of your individual needs.
If you’re buying your first home, your loan needs to be easily manageable, especially in your first year. Home loans have many different features, and it’s important not to judge a home loan solely on the interest rate and upfront establishment fees,” says Michael Cant, executive general manager of retail products at Commonwealth Bank. Take a look at the greater picture beyond the basics. What are the features? Does it come recommended? Will extra fees be tacked on?
Before getting your heart set on a loan, ensure that you are eligible. Many people fail to read the fine print explaining just how excellent your credit score has to be to be approved. If your credit score is less than ideal consider applying for your loan at a later time after putting some work into bettering your number. Your rates will be much more favorable with a higher credit score.
Before rushing into a loan and burying yourself in a financial commitment, make sure that you have weighed out all the possibilities and factors.
Take a look a some of these most common loans out there, and what they entail.
Home Equity Loan
A home equity loan is most commonly a lump sum which comes with a fixed rate of interest. The amount that your home is estimated as are used as a form of collateral with the bank for the amount that you borrow.
Many people take out a home equity loan for a large amount of money for a project, or paying for education. Both of which usually require a lot more than an average middle class person would have on hand. If you are 62 years old and more then consider a reverse mortgage loan because it enables homeowners to access a part of their home equity as cash.
Student loans are usually where a student turns to after they’ve exhausted their list of financial aid they’ve applied for. If there is any amount left that won’t be covered by Financial aid, this is when students turn to how to find a way to pay for the remainder of their costs. They are usually based off of credit score or financial hardship, and must all be paid back eventually!
A car loan is a way for people to be able to drive a nice car without having to save up thousands and thousands of cash for months on end.
Usually these loans have attractive interest rates since it’s a fairly common type of loan. Once again, the better your credit score, the better your interest rates will be.