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Consumer loans are one type of loan available to people in need of money. Consumer loans can be used for a variety of things, but are mainly used to purchase large items. Examples of this would be home mortgages, student loans, or auto loans. However, there are other types of consumer loans that may not be as well understood.

Refinance Loan

A refinance loan is when you close out your initial loan to take out another loan. The new loan is typically one with a lower interest rate and a fixed payment. In order to get the best interest rate, it may be beneficial to use a financial adviser, such as Rescue One Financial. A financial adviser may be able to talk to the lender and get you the best possible interest rate.

Home-Equity Loan

A home-equity loan allows you to withdraw the equity your home accrues over time. This can allow home owners to fix any home repairs or use the money for home improvement projects. However, this type of loan does lower your home’s equity value. This type of loan if often referred to as a second mortgage and typically requires a very good credit score.

Personal Loan

A personal loan allows you to withdraw money without any collateral. This kind of loan can help pay for anything from a vacation to a renovation. A common example of a personal loan would be a credit card. Through the card you are taking out money with the promise that you will pay back the money (with interest) at a later date. A personal loan is typically based on your credit score and income as well as any other loans or debts you have accrued.

There are many types of consumer loans and they can be complicated if you are not well versed in finances. If you are unsure which loan best suits your needs, it may be beneficial to consult with a financial adviser prior to signing any paperwork.

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