Types of loans

I can identify different types of loans explain how my credit score impacts my ability to get a loan

-A loan specifically meant to buy a house.

​-Collateral- The house acts as a collateral (if you don't pay, the bank takes your house)​

-Length: 10, 15, 20, or 30 years​

Look up average interest for each term.​

Mortgage

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​-Equity- the amount your house is worth minus how much you owe

​-You borrow money against your house's worth

-Your house is the collateral

- Term (usually 10 or 20 years)

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Look up average interest rate​

Home equity loan​

-A loan to buy a car

-YOur car acts as the collateral on the loan

-May have 3-8 years terms​

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Look up average interest rate for each term

Car loan​

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​-Money borrowed to pay for higher education

-There is no collateral required but you cannot ever get rid of student debt even if you declare bankruptcy

-Terms vary​

Look up average interest for student loans

Student loans

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​​Loans for personal purchases besides homes and cars.

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Collateral (such as a savings account) can make the loans less expensive.​

Personal loan

Can be used to pay for everyday items or larger purchases.

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No collateral necessary. Paying off monthly will help you avoid paying interest. ​

Credit Card

Laon to start or expand a business.

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Business usually acts as collateral. ​

Business

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