People always try to save their money before purchasing something big. But for many, this remains an incomplete dream due to various reasons. Here’s where loan schemes come into the picture. These are the most convenient forms of financing to achieve major goals in life. The banks in Shelby NC offer different types of loans for different objectives. Whether it is enrolling in a new university, purchasing a car/home, or spending money for a distant wedding, there are various loan schemes available with different repayment structures and tenure.
What is a Loan?
A loan is a form of financial aid offered by banks with different repayment options and different interest rates. A loan can be short-term or long-term with the requirement of collateral or non-collateral prerequisites. To become eligible for a loan application, the person must have a stable earning source, genuine identity card, valid address, active bank account, and decent credit score. In certain cases, a credit score is not evaluated for loan approval.
How Do Different Loan Schemes Work
- Secured Loan: This type of loan is secured on the asset that is to be bought with financed money. In case the lender fails to repay, the asset will be taken by the bank.
- Unsecured Loan: This type of loan comes with higher interest rates with no-collateral prerequisites.
- Installment Loans: This is a term loan that needs to be repaired over a predetermined time frame through fixed monthly/quarterly payments. This type of loan is more flexible and often comes with a zero-interest or minimal-interest policy.
- Fixed Rate Loans: The interest rate of the loan remains unchanged during the tenure of repayment.
- Variable Rate Loans: The interest rate changes in accordance with the baseline rate.
Different Types of Loans and Their Objectives
Four common types of loans offered by the banks in Shelby NC are:
Personal Loans
This type of loan has the broadest scope of financing with 1-10 years of repayment tenure. This type of loan can have fixed or variable interest rates and is mostly used for purposes like
- Emergency expenses
- Vacations
- Medical treatment
- Weddings
- Home improvement projects
- Home relocation etc.
Auto Loans
At the time of car purchase, an auto loan allows people to borrow the vehicle’s cost of acquisition, excluding any down payment. The car is used as security and may be taken back if the borrower doesn’t make payments. Generally, the length of an auto loan is between 36 and 72 months.
Student Loans
Student loans can help students pay for university and graduate school expenses. They are accessible from both commercial lenders and the federal government. Federal student loans include postponement, a grace period, forgiveness, and income-based repayment options. They usually don’t require a credit check. On the other hand, private lenders often need a credit check for student loans, and each one has its own set of lending conditions, fees, and interest rates. They also lack benefits like loan forgiveness or income-based repayment plans.
Mortgage Loans
This type of loan covers the total cost of a home, less any down payment. If a mortgage payment is not made on time, the bank has the right to foreclose on the property as collateral. Mortgages are commonly repaid over 10, 15, 20, or 30 years. Government organizations do not insure conventional mortgages. Its interest rates can either be fixed or variable.
Conclusion
Apart from these aforementioned loans, banks in Shelby NC, offer other types of loans as well, like Home Equity Loans, Credit-Builder Loans, Debt Consolidation Loans, Payday Loans, and many more. Depending on the financing goals, repayment capacity, and convenience, people can opt for any of these loans.
