16 Types of Loans You Can Get in San Diego
Loans can be obtained from a variety of institutions around San Diego for different purposes. There are many types available that serve specific needs, such as recreation or consolidation.
This article will provide an overview of 16 common types of loans to help you make informed borrowing decisions.
1. Personal Loans
A personal loan is generally taken out by people who have bad credit and need the money quickly. Through a credit scoring process, banks will determine their level of risk when offering someone a loan.
In many cases, this results in people with poor credit being turned down but those with good credit being approved (for their loans). The downside to personal loans is that they may have high-interest rates and additional fees associated with them if the lender determines the applicant to be high risk.
People with bad credit can use loan matching services like this one to determine which lenders will approve their application before formally applying, which can protect your credit raining.
2. Land Loans
Made for land purchases, land loans usually come with lower interest rates because lenders have less risk. When obtaining this type of loan, lenders may require an initial down payment of 20-25%, but the rest can be paid in increments until the loan is complete.
3. Pool Loans
The second most common type of home loan is a pool loan used to buy multiple properties at once. The borrower has to work with a real estate agent to help them purchase houses within proximity or located throughout the country.
Homebuyers should take care not to borrow more than they can afford; otherwise, they might risk defaulting on their monthly payments.
4. Auto Loans
An auto loan allows you to finance the purchase of a car, enabling them to be made in monthly payments over time rather than all at once upfront. The rates are often lower on new cars because there is a high demand for new vehicles and not for used ones.
It is important to remember that the interest rate is only one aspect of the total cost when shopping around for an auto loan. It would be best to consider how many years your loan will last and what other fees might fall under this term.
5. Student Loans
A student loan can be taken out by anyone who wants to further their education by attending college or university. These loans are simple in some ways but complicated in others. They are simple in that they can be approved quickly, and the interest rates are often lower than other types of loans.
However, repayment plans can become complicated after graduation because one's income must meet certain thresholds to avoid paying back the loan slowly over time.
6. Mortgage Loans
The goal of a mortgage is to purchase property for personal or business use, which involves taking out a sizeable loan from a bank and making monthly payments on it until it is paid off.
The amount you borrow from the bank and the interest rate will determine how much you pay per month and how long it will take until you own your property free and clear. In addition to this, lenders require borrowers to have good credit scores before approving their mortgages.
7. Payday Loans
A payday loan is a short-term solution for people who need cash quickly but don't have access to more traditional forms of credit. They require the borrower to prove that they will be paid sometime in the future and can thus secure a small loan with relatively low-interest rates (or no interest at all, depending on location).
8. Debt Consolidation Loans
These loans are used to pay off the existing debt by combining it into one more significant sum to be paid back monthly. They generally come with lower interest rates because you consolidate all your outstanding balances into one place, making what you owe appear smaller overall.
This type of loan has become increasingly popular recently because many people have amassed large amounts of debt due to poor financial choices in the past.
9. Small Business Loans
It can be difficult for new businesses or existing ones to expand their operations to find adequate cash flow. The goal of loans like these is to help them get through lean times and keep selling their goods or services until profits begin coming in.
Specifically, micro-loans go toward entrepreneurs who don't have collateral available but would otherwise qualify for traditional bank loans if they did.
10. Home Equity Loans
These loans are taken out using the equity of your home as collateral. They can be used for whatever purpose you want but are best for significant expenses that will last a long time, such as home improvement projects or medical procedures.
It is important to note that these types of loans provide lower interest rates because they are backed by the value of your property and not your credit history.
11. Credit-builder Loans
Low-interest loans require borrowers to pay off what they owe at regular intervals until the loan is paid in full. The most common example is when students have trouble finding an institution willing to offer them a student loan after graduation because their credit score is not high enough due to their age.
However, by taking out this loan, they can show the credit bureau that their credit is improving and eventually qualify for other types of loans in the future.
12. Title Loans
These types of loans allow you to borrow money against your vehicle's title while keeping the car as a security deposit. The terms of these loans are short and generally come with higher interest rates than other types of loans. However, you can use your vehicle to drive to work or run errands while repaying the loan slowly over time.
13. Pawnshop Loans
If you want to borrow money but don't have collateral to secure the loan, you still may qualify for it by providing something of value to pawn. Pawnbrokers take this object and give borrowers an amount of cash in exchange that is generally much less than the item's actual worth.
The borrower must pay back their loan plus interest within a specified timeframe or risk losing their collateral entirely if they haven't repaid what was owed already.
14. Boat Loans
Boat loans are taken out for the same reasons as car or home equity loans, except that they're typically secured by the boat itself rather than the land its moored to.
If you own a boat but don't have enough cash on hand to pay for what you need yet, turning it into security for a loan is an ideal solution. As long as your boat isn't too old, in poor condition, or otherwise difficult to sell if necessary, you should be able to get approved for this type of loan relatively quickly.
15. Recreational Vehicle (RV) Loans
These types of loans are meant precisely how they sound - bigger vehicles like RVs and campers that people use primarily when camping or on vacation. The loans are secured by the RV itself and can be used to purchase one outright or finance a part of the purchase price if you don't have enough cash upfront.
Because these vehicles tend to cost more, they generally require larger loans that usually come with higher interest rates than other personal vehicle loans.
16. Family Loans
Some families choose to help each other out financially in times of need without formally transferring money between accounts or constantly coming up with excuses for why a loan shouldn't be paid back right away.
Instead, they agree that what is owed will eventually return to them in some way at a future date. This agreement becomes a type of formal financial contract which means that if either party doesn't hold up their end of the deal for whatever reason, it can be enforced legally.