Master Sheet

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Loans, Money

Personal Loan General Information
Your promise to pay, the only thing that distinguishes a personal loan from any other loan. Known as unsecured loans, as there is no collateral put up to back the loan, such as a house or car, or any other asset owned that can be pledged for the guarantee of the loan. In a signature loan, the risk is on the shoulders of the lender, not the borrower. For these loans, the borrower, in the eyes of the lender is a low risk of default.

Characteristics of a Personal Loan
The general characteristics of a personal loan are, once they are not backed by collateral, the borrower had excellent credit, and the borrower has sufficient income to make the required payments. Most loans are at slightly higher interest rates than a secured loan, but due to the credit worthiness of the borrower are not at sub-prime interest rates reserved for bad credit risks.

Uses for Car Loans
  • Signature Loans – as it implies, a signature loan is just that, on ones signature. Based on good credit, these loans are tough to get, but if you do qualify for one, the benefits are great to the person who borrows the money.
  • Credit Cards – are a ubiquitous way to borrow money, there is a limit set and you can use that card to purchase goods and services and pay that balance back over time in minimum amounts until paid off. But you are not required to use the card, and if you do not the balance will not increase. 
  • Peer to Peer – a new type of loan that has emerged in the internet age is peer to peer, where the lender can deposit small amounts of money and they are pooled into larger amounts and loaned out to others based on credit, the risk is low, and the return on investment is based on the risk and interest rate charged. 
  • Bad Credit – bad credit loans are high-risk loans to people or companies who have high risk credit.

Car Loan General Information
Purchasing a car is one of those life decisions you make and one of the most popular reasons to take a loan to cover the cost. The price of cars makes it difficult to come up with that amount of money sometimes so getting a loan is often something to consider.  
A car loan is borrowed money that you use to purchase a car that you have chosen and which must be paid back within a set time. The usual length of time for paying a loan back is between three to five years although you can usually choose longer or shorter repayment terms. 
It's a good idea to figure out exactly how much you can afford to pay each month and then find a car within your budget and don't forget to take in other car costs such as fuel, insurance, tax, MOT, maintenance and repairs.  
You may need to consider what interest you will be asked to pay on your loan too as well as making a deposit to secure your car when you decide which you would like to purchase or other fees the lender may request.  
Car Loan Origins
The first person to finance a vehicle was William Durant who saw the demand for cars was increasing and at first Durant started to source cars to sell to people with various budgets. He was the founder of General motors in 1908 and the first to offer the cars he sold on finance.  
Car Loan Specifics
There are three types of loan you can get to buy a car: 
  • Standard Personal Loan – payment of the loan occurs over the term of the agreement. 
  • Hire Purchase – similar to a standard personal loan but the money is secured against your car so if you fail to make your payments you car may be repossessed. 
  • Personal Contract Purchase – this is mainly available from dealers where you pay an initial significant deposit and then lower monthly payments until the loan is repaid. 
There are various places where you can get a loan to buy a car including banks and car dealerships.

Student Loan General Information
A student loan is money that can be borrowed to pay for tuition, expenses such as accommodation and books. The loan is often not due to be paid back until after the student completes the course and sometimes until after the student's earnings exceed a specified amount. 
Almost 20 million students attend college in America each year and 60% of them will borrow money to cover costs. European students often get help from the government in terms of funding although in the UK, Universities are able to charge up to £9000 per year for tuition fees and students can take loans which are paid back in relation to how much they earn once they have graduated. In other parts of the world funding for higher education is considerably lower. 
There are two types of loans that are available: 
  1. Government loans, which can be subsidized or unsubsidized where payments are made, based on earnings after graduation. 
  2. Private loans offered by a bank or other lender where payments must be made regardless of income. 
Student Loan Specifics
Saving for college is probably the most important thing you can do. There may be scholarships or other grants that you can get but the likelihood is they won't cover the full cost of your course and then on top of that you need to be able to travel, have somewhere to live, food to eat, pay your bills and buy books and other study items like stationery. 
You may not have saved enough and the scholarships and other grants may not cover the costs. So a loan may be the route to go to ensure you have the financial means to get the qualification you want to begin your future career.  
A student loan may be your very first financial agreement and it's important to research all your options and find something that is suitable for you. Pay attention to the terms of repayment. Some loans have different ways you can pay it back including during your studies, paying a fixed fee or just the interest. Remember whether you graduate or not, that loan needs to be paid back so think carefully before you sign.

Home Loans General Information
A home loan is borrowed money that can be used to buy a home. It is often called a mortgage or it can be money an existing homeowner can lend secured on their property which allows the lender to take possession of the home and sell the property to pay the loan in the event of the borrower being unable to pay the loan back. 
Individuals can apply for a home loan from a lender, which is usually a financial business such as a bank, building society or credit union. There are also mortgage brokers who will act as a middleman to support the borrower through the entire process of owning their own home. Their services usually incur a fee. 
There are three different types of mortgage: 
  1. Fixed Rate – the interest on your loan will stay the same for the duration of the loan and the payments are split into equal amounts. You can have a fixed rate mortgage for up to 30 years. 
  2. Adjustable Rate – this is where the rate of interest can change from year to year. 
  3. Interest Only Loan – this loan lets you just pay the interest for up to ten years of the loan and they are structured like an adjustable rate mortgage when the initial interest payment time ends payments will be adjusted so you pay the actual loan as well as the interest too. 
Home Loan Origins
The word mortgage is from a French law term used in the middle ages and means death pledge whereby the loan would end when it was paid in full or when the home was repossessed.  
Home Loan Specifics
Purchasing a home will probably be the biggest financial commitment you will make and it's important that you do some research and find out what your options may be. There are online services which can give you an idea of how much you are likely to be able to borrow and what your payments would likely be per month or per year. There are websites online who can guide you through the process and provide you with useful information. Revised November 30th, 2015 Submit a Website

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