What Are The Most Popular Loans and Why?

There are several types of loans that are popular with borrowers, each for different reasons. Some of the most popular loans include:

  1. Mortgages: Mortgages are popular for home buyers because they allow people to purchase a home by borrowing money from a lender and paying it back over a period of time, usually 15-30 years. Mortgages typically have lower interest rates than other types of loans, which makes them more affordable for borrowers.
  2. Personal loans: Personal loans are popular because they are relatively easy to obtain and can be used for a variety of purposes, such as consolidating debt, making home improvements, or paying for unexpected expenses. Personal loans may be secured (backed by collateral) or unsecured (not backed by collateral).
  3. Auto loans: Auto loans are popular for people who want to finance the purchase of a new or used vehicle. Auto loans usually have a shorter term than mortgages, typically 3-7 years, and can have lower interest rates than personal loans.
  4. Student loans: Student loans are popular among college students and their families because they allow students to borrow money to pay for their education. Student loans may be federal (provided by the government) or private (provided by banks, credit unions, and other financial institutions). Federal student loans typically have lower interest rates than private student loans.
  5. Credit card loans: Credit card loans are popular because they are convenient and allow people to make purchases without having to pay cash upfront. However, credit card loans also tend to have higher interest rates than other types of loans, so they can be more expensive if they are not paid off in a timely manner.

Half of Home Buyers Don’t Shop for a Mortgage and Should!

victorian homeA majority of home buyers seek information on mortgage choices from sources that have a stake in their decision, such as Real Estate agents and bankers according to a survey. Only 20 percent of the people surveyed said they rely heavily on websites, despite all of the free mortgage related information on the internet. Even worse only 2 percent seek a lot of information from housing counselors.

Americans may be spending more time shopping for cars, a TV, or new pants than for a mortgage, a report from the Consumer Financial Protection Bureau suggests. Half of consumers seeking a loan to purchase a home do not normally shop lenders.

This will cost the consumer on average around $60 more per month on a 30-year mortgage for $200,000 at an interest rate of 4.5 percent versus someone comparing online and borrowing at 4 percent. In addition, the borrower with the less expensive loan will also build equity faster according to the report. [Read more…]