Unless we are born a multi-millionaire, loans are something that we will always have at some point in our life. While they can be stressful, when put into perspective, they are beneficial. They allow us to have the things we want, without worrying about paying upfront.
In this article, we are going to take a look at 5 of the most common loans that you will probably have in your life. Let’s get started!
1. Car Loan
Buying a car is probably one of the first major purchases you will make in your life and is undoubtedly significant. While you might choose to pick something up second hand, you can also buy something new. However, this can be expensive, with the average new car costing around $36,718 in the US in 2019. For those of us that aren’t super-rich, that generally means we have to take out a loan. Luckily enough, there are many different payment options available, from a few months to a few years.
2. Home Loan
Definitely one of the most common loans, a home loan is something that almost everyone will have in their life (unless you choose to rent, of course). You can either choose to build or purchase a pre-existing property; however, both of them will require some type of loan. According to Zillow, the average price of a home in the US is around $226,800. But if you want something larger, expect the price to keep on rising!
3. Student Loan
Student loans can add up to be a major expense for many young adults, causing both mental stress and financial stress. As of 2019, Investopedia notes that the average amount of student loan debt per borrower sat at $35,359. And at the end of the year, $1.41 trillion of student loan debt was outstanding.
To manage your loans, you should look at ways to pay them off as quickly as possible. If things get hairy, take a look at some student loan wage garnishment help, just in case. It’s always best to be prepared for any situation.
4. Holiday Loan
While it is possible to travel on a budget, it’s not always easy. If you have a family and want to travel the world for an extended period of time, a loan is a great option. You can make your purchases using your credit card and pay it off slowly when you get back home. That being said, expect to pay some extra heavy interest!
5. Emergency Loan
Last on the list; an emergency loan is a type of loan that you may need to take out in case of something unexpected. It might be to cover the cost of a funeral or overseas medical bill. While everyone should have some emergency savings, sometimes it isn’t enough to cover everything.
The world runs on money, and these loans are a way for us to keep up with the times. If you need to take out a loan, it’s vital that you do your research and choose the best plan to suit your needs. The last thing you want is to be stuck paying high interest, which ends up costing you a fortune.