There are plenty of reasons why you may now, for the first time, be looking to take out a loan. On the other hand, perhaps you were so satisfied with the service you received last time you required an immediate influx of cash, that you are looking to take out a loan a second time.

So, in an effort to simplify what can sometimes be a veritable minefield of misinformation and conflicting advice, here are the four main types of loan for any purpose.

1. Personal Loans

The group of loans referred to as ‘personal loans’ cover a wide range of different types, although most personal loans are usually required to be repaid on average between two and seven years.

When requiring extra cash for your upcoming wedding, medical treatment (either planned or of an emergency nature) or for renovating your home, you may consider taking out a personal loan. Lenders such as Sachem Lending will be able to advise you through every step of the process.

Personal loans can also refer to loans such as student loans and in some cases, automobile loans as you would take either of these loans out for yourself, rather than for a group of people or a business.

2. Mortgage Loans

Unless you are incredibly fortunate, chances are that if you are now ready to invest in your own home, you will need help to pay the cost of the property.

This is why mortgage loans are also an incredibly popular form of loans, either in the form of a loan backed by the government, credit union mortgage loans and of course a standard bank loan.

In terms of government-backed mortgage loans, there are three types:

1. VA Loans (for people who are active in their services or else are veterans)
2. FHA Loans (for those with a moderate to low level of income)
3. USDA Loans (for those with a low annual income)

3. Credit Builder Loans

The third most common type of loan is that of a credit builder loan, which is essentially a small amount of money which a person borrows to help them build credit.

Credit builder loans are always short-term loans and are specifically aimed at those individuals who either have a low credit rating at present, or simply have never had need to work on their credit and therefore have no credit rating to speak of at all.

Usually, credit builder loans are available from reputable institutions, which include (amongst other) community banks, credit unions, lending circles and CDFIs (Community Development Financial Institutions).

4. Small Business Loans

Finally, even in the current economic climate, now more than ever more and more people are looking to take their employment and annual income into their own hands by launching their own small business.

Small business loans are either equipment-based loans, working capital loans, SBA (Small Business Administration) loans and term-based loans.

As a general rule, small business loans usually come with many more restrictions and proverbial hoops to jump through. However, they are certainly worth the hard work as they provide vital financing to help the new business begin and become successful.