LOAN FAQ

 What is a loan and why do I need one?

A loan is a sum of money that you borrow from the bank with the expectation you will pay it back with interest. The most common types of loans for homes, cars, or student loans.

What types of loans are there?

The most common form of consumer loans are installment loans. These are when you borrow/are given a lump sum amount of money which you pay back over time usually in monthly payments + interest. The most popular installment loans are mortgages, auto loans, personal loans, and student loans. Mortgages are loans taken out to purchase a home, auto loans are for a new car, personal loans are for whatever you may need quick cash for, and student loans are to help pay for university fees (Check out our student loan blog for more information about student loans!) Each of these loans have a different potential for interest rates, as well as overall length of the loans. While these are the most customary loans, there are many more obscure types of loans. These could be home equity loans, credit builder loans, payday loans, or pawn shop loans. Yet, the thing that changes the most when it comes to loans are the fees and conditions that accompany it. That's right… interest rates, payment requirements, and penalties!

What are the most common types of home loans?

What should I look for when getting loans?

Each loan agreement varies from lender to lender. The most important factor in any loan agreement is the interest rate. An interest rate is a percentage of the loan that you pay in addition to the amount of money you borrow on the loan. The lower the interest rate the lower additional amount of money you will pay on your loan. This is where having a good credit score comes into play.

What is the difference between fixed rate interest vs variable interest rates

Fixed interest rates will remain the same throughout the duration of your entire loan. Variable interest rates have the ability to fluctuate and change to adjust to the economic market. They are not as stable or consistent. 

What is a secured vs unsecured loan?

Secured loans are typically when you have to put something (a car, savings account, etc.) up for collateral in case you do not make your payments those items could be seized from you. Unsecured loans do not require this collateral and are typically given when you have a high credit score.