Auto Loans 

There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer, while an indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer. In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way a mortgage is secured by housing. The duration of the loan period is considerably shorter, however, often corresponding to the useful life of the car.

Construction Loans 

A construction loan is any loan where the proceeds are used to finance construction of some kind. In the United States Financial Services industry however, the term is used to describe a genre of loans designed for construction and containing features such as interest reserves where repayment ability may be based on something that can only occour when the project is built. Thus the defining features of these loans are special monitoring and guidelines above normal loan guidelines to ensure that the project is completed so that repayment can begin to take place.

Debt Consolidation Loans 

A debt consolidation loan involves taking out a loan to pay off many others for the purpose of securing a lower interest rate, securing a fixed interest rate, or for the convenience of servicing only one loan.

Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but it usually involves a secured loan against an asset that serves as collateral — most commonly a house. The collateralization of the loan allows a lower interest rate than without it, because by collateralizing, the asset owner agrees to allow the forced sale (foreclosure) of the asset to pay back the loan.

In theory, debt consolidation is often advisable when someone is paying credit card debt. Credit cards can carry a much higher interest rate than even an unsecured loan from a bank. If debtors can get a lower rate through a secured loan by using their home or car as collateral, their total interest and cash flow paid towards the debt will be lower and will allow them to pay off their debt sooner.

FHA Loans 

An FHA loan is a federal assistance mortgage loan insured by the FHA (Federal Housing Authority). Historically, this U.S. government loan program allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford.

This program, which originated during the Great Depression of the 1930s when the rates of foreclosures and defaults rose sharply, was intended to provide lenders with sufficient insurance. Some FHA programs were subsidized by government, but the goal was to make it self-supporting, based on insurance premiums paid by borrowers.

Over time, private mortgage insurance (PMI) companies came into play, and now FHA primarily serves people who cannot afford a conventional down payment or otherwise do not qualify for PMI insurance. FHA loans have lower qualifying ratios than conventional loans, and often require smaller or no down payments. FHA loans are not issued by the government. Instead, the loans are made and insured by federally qualified private lenders. Any U.S. citizen may apply for a FHA loan.

Home Equity Loans 

A home equity loan or HEL is a type of loan in which the borrower uses the equity in his or her home as collateral. These loans are sometimes useful to help finance major home repairs, medical bills, or college education. Home equity loans create a lien against the borrower's house, and reduces actual home equity.

Home equity loans are most commonly second position liens (second trust deed), although they can be held in first or, less commonly, third position. Most home equity loans require good to excellent credit history, and reasonable loan-to-value and combined loan-to-value ratios.

Home equity loans come in two types, closed end and open end. Both are usually referred to as second mortgages since they are secured against the value of the property just like a traditional mortgage. Home equity loans and lines of credit are usually, but not always, issued for a shorter term than first mortgages. In the United States, it is sometimes possible to deduct home equity loan interest on one's personal income taxes.

There is a specific difference between a home equity loan and a Home Equity Line of Credit (HELOC). A HELOC is a line of revolving credit with an adjustable interest rate whereas a home equity loan is a one time lump-sum loan, often with a fixed interest rate.

Mortgage Loans 

A mortgage loan is a very common type of debt instrument used by many individuals to purchase housing. The word mortgage in everyday usage most often refers to a mortgage loan. Thus, a mortgage loan is a loan secured by real property through the use of a mortgage.

In this arrangement, borrowed money is used to purchase the property. The financial institution, however, is given security — a lien on the title to the house until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess and sell the house in order to recover money owed to it.

Most loans fall into three major categories: fixed-rate, adjustable-rate, and hybrid loans that combine features of both. While the different choices may seem overwhelming at first, the overall goal is really quite simple: you want to find a loan that fits both your current financial situation and your future plans.

A fixed-rate mortgage (as the name implies) carries the same interest rate for the life of the loan. Traditionally, fixed-rate mortgages have been the most popular choice among homeowners, because the fixed monthly payment is easy to plan and budget for and can help protect against inflation. Fixed-rate mortgages are most common in 15 and 30 year terms, but recently, more lenders have begun offering 20 year and 40 year loans.

An adjustable-rate mortgage (ARM) differs from a fixed-rate mortgage in that the interest rate and monthly payment can change over the life of the loan. This is because the interest rate for an ARM is tied to an index (such as Treasury Securities) that may rise or fall over time. In order to protect against dramatic increases in the rate, ARM loans usually have caps that limit the rate from rising above a certain amount between adjustments such as no more than 2% a year, as well as a ceiling on how much the rate can go up during the life of the loan such as no more than 6%. With these protections and low introductory rates, ARM loans have become the most widely accepted alternative to fixed-rate mortgages.

A hybrid loan combines features of both fixed-rate and adjustable-rate mortgages. Typically, a hybrid loan may start with a fixed-rate for a certain length of time, and then later convert to an adjustable-rate mortgage. However, be sure to check with your lender and find out how much the rate may increase after the conversion, as some hybrid loans do not have interest rate caps for the first adjustment period. Other hybrid loans may start with a fixed interest rate for several years, and then later change to another (usually higher) fixed interest rate for the remainder of the loan term. Lenders frequently charge a lower introductory interest rate for hybrid loans versus a traditional fixed-rate mortgage which makes hybrid loans attractive to homeowners who desire the stability of a fixed-rate but only plan to stay in their properties for a short time.

A home buyer or builder can obtain a loan (financing) from a financial institution such as a bank, either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably.

Payday Loans 

A payday loan, sometime referred to as a paycheck advance or payday advance, is a small, short-term loan that is intended to cover a borrower's expenses until his or her next payday. Typical loans are between $100 and $500 and have interest rates in the range of 390% to 780% APR for a two-week term. Payday loans may also be referred to as cash advances, although that term can also refer to cash provided against a prearranged line of credit such as a credit card.

Stock Hedge Loans 

A stock hedge loan is a special type of securities lending whereby the stock of a borrower is hedged by the lender against loss and risk via options and other hedging strategies.

Student Loans 

A student loan is a loan offered to students to assist in payment of the costs of professional education. These loans usually carry a lower interest rate than other loans and are usually issued by the government. Student loans are often supplemented by student grants which do not have to be repaid.

VA Loans 

A VA loan is a federal assistance mortgage loan insured by the VA (Department of Veterans Affairs). Historically, this U.S. government loan program allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford.

The VA loan was designed to offer long-term financing to American veterans or their surviving spouses (provided they do not remarry). The basic intention of the VA direct home loan program is to supply home financing to eligible veterans in areas where private financing is not generally available. Eligible areas are designated by the VA as housing credit shortage areas and are generally rural areas and small cities and towns not near metropolitan or commuting areas of large cities.

The VA loan allows veterans 100% financing without private mortgage insurance or 20% second mortgage. A VA funding fee of 0% to 3.3% of the loan amount is paid to the VA and is allowed to be financed. In a purchase, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less. In a refinance, veterans may borrow up to 90% of reasonable value, where allowed by state laws.

VA loans have lower qualifying ratios than conventional loans, and often require smaller or no down payments. VA loans are not issued by the government. Instead, the loans are made and insured by federally qualified private lenders. VA loans are only available to veterans or their spouses and certain government employees. VA loans are guaranteed in case the borrower defaults.