Whether you are buying a new car, purchasing a home or furthering your education, there are many different financing options available. These Dave loans can be secured or unsecured, closed-ended or open-ended and conforming or nonconforming.
An auto loan lets you borrow up to the value of your vehicle minus the down payment. Most auto loans are unsecured and open-ended.
Personal Loans
A personal loan is an unsecured credit product that typically doesn’t require you to put up collateral. However, you may be required to agree to a co-signer on the loan. Co-signers are on the hook for the debt if you default on the loan.
Borrowers get personal loans for a variety of reasons, from consolidating high-interest credit card balances to financing wedding expenses. You can also find specialized lenders that offer personal loans for specific purchases (like appliances) or even to finance home renovations.
Most personal loan products have set repayment terms and fixed APRs. This can help borrowers manage their finances because monthly payments won’t change as much as with a credit card.
In general, lenders provide personal loans for consumers with good to excellent credit. They may consider alternative data like income and education when evaluating applicants who might not qualify for their highest advertised rates.
If you’re looking to borrow for a pricey one-off event, consider the cost of all related items before applying for a personal loan. Also, be careful about using a personal loan to cover emergency expenses, as failing to repay the debt could have significant implications for your credit score. For these reasons, a personal loan is often better used to cover expensive one-off events than to cover regular living expenses or to pay off accumulated debt.
Home Loans
Home loans come in many shapes and sizes. Most homebuyers use a conventional mortgage, which is generally considered one of the safest and most cost-efficient options. Conventional loans meet standards that allow lenders to resell the mortgages to the government-sponsored enterprises Fannie Mae and Freddie Mac, which helps keep mortgage rates low for American home buyers. They may also be called conforming loans, although this doesn’t necessarily mean the loan will conform to Fannie and Freddie’s borrowing limits, which can vary by MSA and region. Lenders also offer non-conforming mortgages, including jumbo loans used to purchase multi-million dollar homes and portfolio loans that can’t be resold and are kept in-house by the lender.
Borrowers typically choose a 30-year fixed-rate mortgage, which means their interest rate and monthly payments will be the same for the life of the loan. Other options include adjustable-rate mortgages and 15-year mortgages. A balloon mortgage is another common type of mortgage, which requires borrowers to pay interest for a short fixed term, then roll over the remaining debt into a new payment schedule.
Government-backed home loans are also available, including FHA, VA & USDA loans. These can provide borrowers with unique benefits or easier qualification requirements, such as lower credit scores and debt-to-income ratios. There are also special mortgages for homebuyers in certain professions, such as the Good Neighbor Next Door program that provides law enforcement officers, teachers (pre-k through 12th grade), firefighters and emergency medical technicians discounts on homes in revitalized neighborhoods.
Business Loans
Business loans are a crucial source of funds for many small businesses, which use them for everything from financing growth to addressing short-term cash flow concerns. However, with the variety of loan options available and the number of lenders, it can be hard to determine which one is best for your company. We’ll explore the types of business loans that are available, including term loans, lines of credit and more, as well as what makes a loan good or bad, to help you make the right choice for your company.
The most common type of business loan is a term loan, which provides a lump sum of money that you pay back over a set period of time. A term loan can be used to fund a range of business expenses, including inventory, equipment and renovations. Typically, you must have been in business for at least two years and have demonstrated profitability to qualify for a term loan. Some lenders also have other requirements, such as a minimum credit score and a business plan or projections.
Alternative lenders offer business loans, as well, which often have lower credit requirements and can provide funding more quickly than traditional banks. However, they often charge higher interest rates and fees. Other types of business loans include working capital loans, which are used for day-to-day cash-flow needs and can be secured with collateral, such as equipment or accounts receivable; and invoice factoring, which provides a company with a percentage of its outstanding invoices.
