When people need money, loan options will always be there. The variety of loans options have gone up over the years. It’s good for applicants because they get a chance to take out a loan for a specific amount of money instead of having to take out too much or too little.

What are some of the major types of loans out there? Having a better understanding of the benefits of each is a great way to begin the process of taking out a loan.

Personal Loans

A personal loan is a type of loan that can be used for various purposes. Typically, personal loans have lower interest rates than other types of loans, making them a good option for those who need to borrow money. Personal loans can be used to consolidate debt, finance a large purchase, or pay for an unexpected expense. 

There are a few things to consider before taking out a personal loan, such as credit score and debt-to-income ratio. Companies like Dutton Lending can help answer your questions about personal loans and walk you through the process.

When considering a personal loan, it’s a good idea to speak with a financial advisor to get started. They can help explain options and make sure each person is making the best decision for their financial future. Dutton Lending is always willing to help.

Auto Loans 

An auto loan is a type of loan used specifically to finance the purchase of a vehicle. Auto loans are typically available from banks, credit unions, and other financial institutions.

The benefit of an auto loan is that it can help a person finance the purchase of a vehicle. If they do not have the cash on hand to pay for the vehicle outright, an auto loan can provide the funds needed to complete the purchase. Auto loans typically have lower interest rates than other types of loans, so they can save a person money over time. Additionally, auto loans can be used to finance both new and used vehicles. 

Student Loans 

A student loan is a type of loan specifically designed to help students pay for their education. Student loans work to cover the cost of tuition, books, and other educational expenses. The benefit of a student loan is that it allows a person to finance their education without having to worry about coming up with the money upfront. Student loans also typically have lower interest rates than other types of loans, which makes them more affordable in the long run. 

When considering a student loan, shop around and compare different lenders to find the best interest rate and terms. There can be some very favorable loans for students. The thought process is that when a person takes out a student loan, they are more likely to find a more successful job later on. 

Mortgage and Home Equity Loans

Mortgage loans aim to finance the purchase of a property. The loan is secured by the property itself, which means that if the borrower defaults on the loan, the lender can seize the property. Mortgage loans are typically paid back over a period of years and usually have much lower interest rates than other types of loans. This makes them an attractive option for people who are looking to buy a home.

There are several benefits to taking out a mortgage loan. First, it allows people to buy a home without having to pay the entire purchase price upfront. Most people can’t buy a house outright, making a mortgage loan necessary. 

Second, the interest rate on a mortgage loan is usually lower than the interest rate on other types of loans. This can save a significant amount of money over the life of the loan. Mortgage loans are also typically tax-deductible. This means a person can deduct the interest paid on the loan from their taxes.

Make sure to understand all of the terms and conditions of the loan before signing anything. Mortgage loans can be a great way to finance the purchase of a home, but they need to be carefully considered before committing to one.

Credit-Builder Loans

Not everyone has a ton of credit history when starting out. A credit-builder loan is a type of loan that helps build credit. The benefit of a credit builder loan is that it can help improve a credit score, making it easier to get approved for loans in the future.

For those with bad credit or no credit, a credit builder loan helps people get on the right track. Here’s how it works: a person borrows a small amount of money and agrees to make regular payments over a set period of time. As they make payments on time, this positive activity gets reported to the credit bureaus, which can help improve a credit score.

Banks, credit unions, and online lenders typically offer credit builder loans. Remember, as with any loan, making payments on time and in full is essential to avoid negatively affecting a credit score.

Debt Consolidation Loans

Debt consolidation loans work so that borrowers can consolidate multiple debts into one single payment. This can be beneficial for borrowers struggling to make multiple debt payments each month, as it can simplify the repayment process and potentially save money on interest charges. 

In some cases, debt consolidation loan can also help borrowers improve their credit score by consolidating high-interest debts into a single loan with a lower interest rate. Dutton Lending is one example of a company that offers debt consolidation loans. It is easy to apply on their website, and they are always willing to help answer any questions.

Payday Loan

Sometimes, money is needed quickly. A payday loan is a short-term, high-interest loan that takes care of money needs quickly. But they must be paid back quickly to avoid high fees. Payday loan can be very expensive, with APRs (annual percentage rates) as high as 400% or more. If you are in a bind and need cash quickly, a payday loan might seem like a good option. 

Payday loan should only be used responsibly when people need money. If a person finds themselves taking out multiple payday loans a year. They should seek professional assistance in handling finances to avoid constant, huge fees.

How Dutton Lending Helps with Different Types of Loans

With all the different loan options, the best thing to do is to go to a reputable lending company. Dutton Lending has a way of coming up with different loans to fit a person’s specific goals. There’s no need to feel overwhelmed when applying because there are plenty of resources to find the right choice.

Another benefit of Dutton Lending is that they have a team that will answer any questions a person might have before applying. Just getting that extra sense of confirmation that the right choice is being made is a true difference-maker.