There are many different types of loans available in the US. From bad credit loans, to payday loans, installment loans and emergency cash loans, several financial products exist that cater to all different types of customers with a variety of financial backgrounds and borrowing requirements.
This guide delves deeper into the different types of loans that are on offer. With the different loan types explained, Dollar Hand gives an insight into a variety of loans that Americans may encounter.
Bad Credit Loans
If an individual has a bad credit score, getting a loan from a traditional lender such as a bank can often become difficult. Having bad credit tends may suggest to lenders that an individual has struggled to pay back credit or a loan that was given to them, which has caused their credit score to be lowered as a result.
Lenders who offer bad credit loans allow an individual to be assessed using a different criterion, which will help in being approved for a loan. For instance, factors such as whether they have a stable job or regular income may be considered. Typical loans amounts can vary so applicants could borrow $300, $500 or even $1000 and over.
No Credit Check Loans
No credit check loans allow a borrower to become eligible for a loan without having to have their credit score checked. Usually, lenders will need to see certain criteria including being over the age of 18, being a US citizen who earns at least $800 a month through a steady job and having a live checking account for the loan to be sent to . The main factors lenders look at is age, employment and income, so as long as these thresholds are reached you are almost guaranteed a loan from a lender.
Make sure you understand the risks of these types of loans; by not having a credit check, lenders will often lend you less money, and charge you a higher interest rate, or in some cases even ask for collateral such as your car, due to the high-risk nature of the loan.
Emergency Cash Loans
Emergency cash loans are primarily used if you need to borrow money urgently to pay for an unexpected financial expense that cannot wait until you receive your next paycheck. This can include paying for important costs such as pet bills, car repairs, medical expenses, rent or even a funeral.
Before taking out an emergency cash loan you must make sure that you are able to make the repayments – the typical loan usually needs to be repaid within 30 days. Emergency cash loans with no credit check are possible as long as you meet the minimum loan requirements. States that offer emergency cash loans include California, Alabama, Kentucky and Texas to name a few.
A cash advance is essentially an advance on your pay check before you receive your money from work. It is a quick and simple way to access cash fast when extra expenses or unexpected emergencies occur. .
Cash advances can range from an amounts of $100 all the way up to $35000, and the length of the loan can range from 10 days to 5 years, or 60 months. You are able to get a cash advance even with no credit or a bad credit score, as long as you meet the requirements from the lender, which is normally related to age, income, and employment.
An installment loan enables an individual to borrow money online and pay for it in installments rather than as one lump sum repayment. When it comes to each installment, this will consist a portion of the full loan, plus interest that has accrued on the loan.
Installment loans typically allow a borrower to have access to higher loan amounts over larger periods of time, up to 60 months, which is an alternative to a traditional payday loan, where the loan usually has to be paid back within 30 days.
To be eligible, borrowers must own a mobile phone, be a US citizen over 18 years old and be able to afford the monthly repayments by earning a regular monthly income of around $500-800. You must also make sure you have a live checking account for the funds to be deposited into, should you be successful.
You can be eligible for an installment loan even with no credit or bad credit, and can access one in many states including Florida, Tennessee, Ohio, and Colorado.
Short Term Loans
Short term loans are used when a borrower is looking for a temporary influx of cash, for occasions such as a new car, or starting a new business. Short terms loans are different to other loans as they are only taken out over a couple of months, rather than installment loans, which can often be repaid back over a maximum term of 5 years.
Short term loans can be accessed even with bad credit, based on the criteria of the lender, but it may be more difficult to get a short term loan with no credit checks, as lenders more often than not have to run these checks to understand your financial eligibility.
In order to be approved for a short term loan, you will need to be over 18, prove you are a US citizen and earn over $800 a month, along with a few other factors such as stable employment and a bank account to have the funds deposited into.
A mortgage is a type of loan used to fund the purchase of a house, land or any other type of real estate. The borrower will have to pay an initial deposit to be approved for a loan by the bank, which is typically 25% of the purchase price, and the lender will then provide the other 75% through a loan.
Of course, the amount that can be funded by the lender ultimately depends of the borrowers credit score and a number of other factors such as employment history and income, with the average mortgage lasting around 25 years, but they can be taken out up to a maximum of 40 years. Mortgages are a very popular financial product, with the Consumer Financial Protection Bureau reporting over 23.3 million home loan applications in 2021 alone.
There are several types of mortgages that can be chosen from such as repayment, interest only, and fixed, which all offer the borrower different options when it comes to what type of loan they want to pay. For example, repayment mortgages allow the borrower to pay off both the interest and capital of the loan, whereas interest only mortgages mean the payments per month will be lower, but the borrower will only pay the interest on the mortgage, meaning that they have to rely on the value of the property going up to see any proper profit advantages.
In conclusion, make sure you do thorough research before taking out any type of loan. It is important to understand how it works, read all the terms and conditions of the loan agreement and be certain that you will be able to afford the repayments before borrowing money.
Justine is a full-time writer with lots of expertise and a wealth of experience in the financial world. In particular, she specializes in household income and consumer finance across the United States. Follow her articles for useful advice and top tips, guides on how to save money and lots more.