A loan can save people from financial disaster. It can keep a person from losing a home, car, and sanity.
While many people try to say that getting a loan is a horrible idea, that’s simply not true. It’s all in the type of loan you secure, how you use it, and your commitment to paying it back.
Types of Loans
There are a few types of loans you should consider when you need a financial boost or just temporary relief when financial troubles come your way.
These loans are to help people seek a higher education. According to the CollegeBoard, people who have a bachelor’s degree or higher end up earning more in their lifetime.
Most people cannot purchase a home with cash. A home loan makes it possible for people to own a house by paying a mortgage.
Bills can get out of control, and with high interest rates, it can be overwhelming. You can consolidate all of your bills into one personal loan, which may carry a lower interest rate. This can save you a lot of money.
Crises happen and most people don’t have the funding to pay for them. Emergency loans have been created for that reason. They are a great peace of mind in times when life becomes difficult.
Just because people have bad credit doesn’t mean they can’t secure a loan. Bad credit loans help people who have made financial mistakes in the past. It helps people get back on their feet. They often carry higher interest rates, but if you’re able to pay it off, you will end up improving your credit.
Most people need a car to get to work, shop for groceries, and take their children to school. Cars are expensive though. Just like buying a house, if you get an auto loan, you can have a car as long as you pay the monthly car payments.
Owning your business is a great way to achieve success in your career. It takes money to make money though, so business loans help you get that start in the business world.
Student Loans for Single Mothers
Stafford loans are those that help students who are enrolled in accredited institutions in the United States. Since these are to help students seek a higher education, interest rates are lower and students don’t have to repay the loan until they graduate. Even after graduation, students have six months before they are required to pay on their loan. This helps students find employment to be able to afford the repayment of the loan. If students do not graduate for any reason, they will still be required to pay back the loan, but they still have the six months grace period before they need to start paying on it.
This loan is available as subsidized and unsubsidized. Subsidized loans are for those that have financial need. The interest is paid for by the federal government. Unsubsidized loans are for students who earn more money than the subsidized loans criteria identifies. Students are responsible for paying all of the interest that accumulates with that type of Stafford loan.
You will need to complete FAFSA form to be considered for Stafford Loans. This is how the government determines if you should receive a subsidized or unsubsidized loan. You can find more information at http://www.staffordloan.com.
Perkins loans help students who have a low income. They come with low interest rates. This is a federal regulated loan program and only certain postsecondary institutions accept these types of loans for tuition payments. Currently, there are about 1,700 institutions participating. Students do not have to repay the loan until school disenrollment. Those that choose to use their loan to seek a degree in teaching and then go on to teach in a low-income school may be able to have their loan deferred. In addition, students who are unable to seek employment generate enough income to pay back the loan may be able to have the loan deferred. Loan deferment may be possible based on other economic hardship situations as well.
Perkins loans are for students who can demonstrate they are financially needy by completing the FAFSA form. Income limits for the Federal Perkins Loan Program change annually.
For more information about Perkins loans, please go to the government’s Department of Education website.
GRAD Plus Loans
GRAD Plus Loans offer money to students in financial need. This is the federal government U.S. Department of Education loan program. To use this loan, the school must be a Direct Loan Program participant.
Only graduate and professional degree students who are in financial need can use this type of loan. Parents of undergraduate students may use it. Borrowers cannot have an adverse credit history. Maximum loan amount is determined by how much it costs to attend the institution minus any other financial aid received.
For more information about GRAD Plus Loans, please visit the Department of Education website.
Private loans are also known as Private Education Loans or Alternative Education Loans. This is a loan that helps cover the costs the government financial aid and loan won’t pay for when seeking a higher education. These loans are not governed by the federal government, but they are offered by private lenders.
For private loans, your credit score matters. If you’re FICO credit score is less than 650, you may not be able to secure a loan or you may receive one at a high interest rate. Cosigners can help with getting a loan because their credit scores will be taken into account as well. Keep in mind, a difference of 30 to 50 points on a credit score can have a significant effect on loan terms.
Most banks offer private loans for educational purposes. For more information about private loans, visit http://www.finaid.org/loans/privateloan.phtml.
Home Loans for Single Mothers
FHA loans are home loans governed by the Federal Housing Administration. This government agency is part of the Housing and Urban Development department. Since the government insures these loans, the cost to homeowners is significantly less than going through private lenders. Other benefits of FHA loans include being able to have a lower down payment, lower closing costs and credit qualification is often easier.
All FHA loan applicants must have a social security number. They must be legal United States residents and be over the legal age to purchase a home. FHA home loan lenders check income, debt, credit and assets to determine whether not the potential homeowner can afford the monthly mortgage. If it is determined the applicant can’t afford the monthly mortgage, the loan will not be given. Credit score does not have an effect on whether or not you get the loan, but it does affect the interest rate.
Visit the Housing and Urban Development website for more information about FHA loans.
Personal Loans for Single Mothers
A secured loan is one in which the borrower sets up a collateral. This collateral is what is taken away if the borrower defaults on the loan. The bank can then sell the collateral to make up the money from the loan.
Most people can get a secure loan as long as they have decent credit. The amount they will be able to get depends on the collateral offered.
Most banks offer personal loans to their customers. Visit a financial institution such as Bank of America or a local bank for more information about secured personal loans.
Unsecured loans are much like secured loans, but the borrower does not have to offer collateral.
Since collateral is not offered, it can be more difficult to be approved for an unsecured loan especially if applicants have a low income or have a poor credit history. The amount of a loan people can get depend on income and credit history as well.
Unsecured loans are also available through banks in your local area.
Fast Cash Advance
A fast cash advance offers cash to those in financial need. This type of loan comes at a high interest rate. Many companies offering fast cash advance services will require collateral in case of default. Repayment of the loan must be done as soon as possible. The longer it takes borrowers to pay back the loan amount, the more money they need to pay back and some people end up with a large sum of debt because of it.
Borrowers must be legal United States residents. They must complete an application to receive cash and any information needed for the collateral.
For more information about Fast Cash Advance, visit the Fast Cash website.
Christian lending is offered by organizations that believe giving money to those with financial needs to be able to make ends meet is the right thing to do.
People needing money must show they are in financial need. They must also tell the Christian lending organization what they need the money for such as shelter, food, transportation, or bills for heat and water.
While there are many organizations offering Christian lending, the most popular one is America’s Christian Credit Union. Applying for a loan can be done on the website.
This type of loan is for those who have poor credit. They believe people make mistakes and sometimes find themselves in bad financial situations, so they want to give them a second chance. Once approved, the money needed goes into a share account. Once borrowers earn money from their employment, the money gets deposited into the share account, and as the loan gets paid off, savings is also accrued. By the time the loan is paid off, the borrower would have improved upon credit score and built a savings.
Eligibility is determined by looking at credit history and income to determine whether applicants are good candidates for the program. The maximum borrowing limit is $500.
While there are many financial institutions offering this type of program, you can learn more about Tarrant County Credit Union’s Second Chance Program on its website.
Homeowners can use their home as collateral for money. The money is usually used for home repairs, medical bills and college tuition. When people take out a home equity loan, they run the risk of losing their house if they default on repayment of the loan. If the home has equity through increased value, the borrower will end up not being able to get that extra money when they sell their home because it will be used to pay off the loan.
Interested borrowers must have good credit history. Loan to value ratios must be good too.
The bank that handles the home mortgage can offer home equity loans, or you can check with other financial institutions such as Wells Fargo.
Emergency Loans for Single Mothers
Payday loans are those that do not require you to offer collateral for a loan. There is no credit check either. The amount you can receive depends on your income. When receiving the loan, you will receive a payback date. This is usually on the day of your next payday. You must pay the amount you borrowed plus interest at this time.
Eligibility is determined by income. If borrowers have enough money at payday to pay back the loan they ask for, they can usually get that amount. For those who would like to get the loan online, they must have an active bank account to have the money transferred to it.
There are a few payday loan companies around the United States and online. One of the most popular ones is ACE Cash Express.
Auto Loans for Single Mothers
Pre-computed loans are not the most favored type of loan because it calculates all of the interest borrowers pay over the course of the loan term and adds it automatically into the loan. This means borrowers will not benefit from paying off the loan early. In fact, borrowers are penalized for paying the loan off early. In addition, when borrowers make a payment, it goes to the interest first and it will only go to the principal after the interest is paid off.
The eligibility for pre-computed loans is the same as many other standard loans. Borrowers must have decent credit and provide income information showing they will be able to make the payments each month.
Many financial institutions offer this type of loan. You can learn more about it on the Bank Rate website.
Car Equity Loans
Car equity loans are also known as pink slip loans or you drive loans. With this type of loan, borrowers use their vehicle as collateral. They can walk away with cash, but they risk losing their vehicle if they default on the loan. Repayment of loans must be complete by 36 months, and the minimum amount of money that can be borrowed is $2,600. You can pay off the loan as soon as you would like to.
The vehicle used as collateral has to have a free and clear title. The vehicle needs to be worth at least $5,000 and you must have insurance. Interested borrowers must also have a proof of employment and provide a copy of a phone and utility bill with current address. A spare key to the vehicle must be handed over when cash is given.
The Car Equity Loans website offers this type of loan. Please visit the website for more information.
Auto Title Loans
Auto title loans are also called car title loans, pink slip loans, and title loans. This is a secured type of loan with the title being the collateral. The lender places a lien on the car title and takes the title in exchange for the cash. When the loan is paid back, the car title is returned to the borrower. If the borrower defaults on the loan, the lender takes the vehicle and sells it to recoup the loan money. These loans carry a high interest rate.
Lenders who offer auto title loans do not check people’s credit. The only eligibility requirement is that the borrower has a vehicle’s title and gives them permission to put a lien on it.
Lenders for car titles loans can come from Wells Fargo and many other financial institutions.
Business Loans for Single Mothers
Starting a business takes some money, and if you need help with that, you might want to consider a SBA loan. These loans are best for those that have difficulty securing a traditional bank loan. These loans are offered through local banks and other lending institutions.
The government represents SBA loans, so there are some eligibility requirements for each type of loan offered. The types of loans available are:
- Basic 7(a) Loan Program
- Certified Development Company (CDC) 504 Loan Program
- Microloan Program
- Disaster Assistance Loans
- Economic Injury Loans
- Export Express
- Export Working Capital
- International Trade Loans
- Patriot Express Pilot Loan Initiative
- Military Reservist Economic Injury Disaster Loan
- Pollution Control Loans
- U.S. Community Adjustment And Investment Program (CAIP)
For more information about SBA loans, go to the Small Business Administration website.
Working Capital Loans
Working capital loans are those that enable you to have enough cash on hand to handle your short term financial obligations. Every business should have enough working capital to do this, but in times of financial difficulties, there can be a loss. This is how working capital loans help business owners.
Working capital should be available in a business at all times, so the lender will look at the finances of a business to determine if this is temporary problem or it’s something that will continue to be one. The working capital loan is one that is supposed to be used to take care of momentary problems as the business gets back on its feet to handle the finances on their own and pay back the loan. Since every business is different in the number of obligations it has and revenue history and future, eligibility is on a case by case basis.
For more information about working capital and loans to help during financial hardships, go to the Small Business Administration website.
Hard Money Loans
This is an asset-based loan. The values of assets are what determine the amount of a loan a borrower receives. Interest rates are often higher because the lender loses a lot of money if the borrower defaults. Only private investors or companies are willing to provide this type of loan. Most often, hard money loans are for large projects that take months or years to complete.
Eligibility varies a great deal depending on the lender and the purpose of the loan. Most lenders will consider credit scores and income in relation to what the borrower wants to do with the money.
Since these loans are only offered by private investors and companies, borrowers must seek them out. Biggerpockets.com has a directory of them.
A peer to peer loan is popular with investors because it’s giving money to a business owner who they believe will be successful. These loans are also referred to as person-to-person lending, peer-to-peer investing, and social lending. These loans don’t go through a traditional financial institution. All of the transactions take place online.
There are no eligibility requirements for these loans. Business owners propose what they want to do with a loan and investors decide if they want to invest in it.
There are a few websites catered to peer-to-peer loans. Prosper.com is a popular website to find investors interested in providing these loans.
Start up Business Loans for Single Mothers
Startup loans are especially for those who have a dream of starting a business, but don’t have the funding to do it. These loans are offered by the Small Business Administration (SBA) and are given at local banks and credit unions. There are two types of loans:
- 7(a) Loan Program – This is the most popular one. Business owners can get up to $750,000. Part of it is backed by the SBA.
- 504 Loan Program – The money from this loan should be used to purchase assets such as property or equipment.
Each loan has it’s on eligibility requirements. You need to consult the SBA website to find out which types of businesses qualify for these loans.
For more information about start up loans, go to the SBA website.