Finding The Right Loan For You

Online, July 18, 2010 (Newswire.com) - There are many types of loans, and when you're looking to borrow money, it's important to know your options.

Open and closed ended loans are loan two options. Open ended loans are loans you can borrow over and over, such as credit cards and lines of credit. With both, you have a credit limit that you can make purchases against. Each time you make a purchase, your available credit decreases As you make payments, your available credit increases.

Closed ended loans can't be borrowed again once they are paid. As you make payments on this type of loan, the balance of the loan does go down, but you won't have any additional available credit. If you need to borrow more money, you will have to apply for another loan. This type of loan includes mortgage, auto and student loans.

Secured loans are loans that rely on an asset as collateral for the loan. If the even of a loan default, the lender can take possession of the asset and use it to cover the loan. Interest rates for secured loans may be lower than those for secured loans, and the asset may need to be appraised before you can borrow a secured loan.

Unsecured loans don't have asset for collateral. These loans may have higher interest rates, but are much easier to obtain through many lenders. Unsecured loans rely solely on your credit history and your income to qualify you for the loan. If you default on an unsecured loan, the lender will use collection options like debt collectors and a lawsuit to recover the loan.

Conventional loans are those that aren't insured by a government agency, and may be conforming, meaning they follow the guidelines set forth by Fannie Mae and Freddie Mac. Non-conforming loans don't meet those qualifications.

Payday loans are short-term loans borrowed using your next paycheck as guarantee for the loan. Some have high interest rates.

For many small business owners or those seeking a
personal loan, unsecured loans are the right choice. To find out more about obtaining such a loan, click here.