Common Traditional and Non-Traditional Loan Types
Our loan calculators are most useful when the user has an idea of their credit worthiness and the type of loan they actually need.
While our calculators are focused on personal unsecured loans and auto loans, we've provided a brief summary of some common loan types
and how they differ.
Traditional Loan Types
These are popular finance products typically available from banks, credit unions and finance companies.
Auto loans are secured by the purchased vehicle, but since vehicle values depreciate there is a certain amount of risk involved
to the lender. Lenders will generally have "Prime Rates" available to purchasers with good credit and "Sub-Prime" or "Special Financing"
rates for buyers with lower credit scores. Interest rates for used vehicle loans are slightly higher than for new vehicle loans.
Auto loans typically have terms from 1-6 years, though some lenders are offering repayment terms of up to 9 years.
Our loan calculator can be used to calculate loan interest, payments and loan amounts for auto loans:
Unsecured Personal Loans
This is a personal loan that is not secured by any particular asset and for which approval and interest rates are based on your
personal credit history. These loans are typically 12-48 months in length.
Our loan calculator can be used to calculate loan interest, payments and loan amounts for unsecured personal loans:
The most common type of revolving credit is the credit card. Home equity lines and bank credit lines are also types of revolving credit.
The client is approved to borrow up to a certain limit which remains available as it is paid off and as long as the account is in good standing.
Our credit card payoff calculator can be used to calculate pay down times and payment amounts for revolving credit accounts:
Mortgages are long term (10 to 30 year) secured loans where the purchased property is the secured asset.
There are a few common types of mortgage:
A fixed interest rates that renews on a set schedule, typically 3 to 5 years.
- Adjustable Rate or Variable Rate
Interest rates "float" with market rates. Rates are typically lower than fixed rates, but can be volatile.
Non-Traditional Loan Types
These are popular finance products typically available from product dealers, retailers or specialized finance companies.
Buy Here Pay Here or "In-House" Auto Loans
While many banks and finance companies offer auto loans, some dealers may also provide financing directly to high risk clients unable to get traditional financing.
This may be referred to as "In-House Financing" or "Buy Here Pay Here" financing. Since the risk of default is higher for these types of loans,
interest rates are typically higher as well. In order to help mitigate default risk, some in-house lenders may require installation of
Global Positioning System (GPS) or starter interrupt devices on the vehicles to deactivate the vehicle or facilitate repossession for non-payment.
Installment Loans and Sub-Prime Personal Loans
These are high interest personal loans for higher risk clients who don't qualify for traditional financing.
Typical terms are from 6 to 60 months. Installment loan amounts can range from $500 to $5000+.
Title loans are very high interest short-term personal loans secured by the title of a tangible asset. If you fail to meet your obligations with the loan,
the lender may be able to take your asset, such as a vehicle, as a payment option. Typical terms are 15 to 30 days and loan amounts can vary from $500 to $10,000+.
These are very high interest short-term personal loans. If you fail to meet your obligations with the loan,
the lender will typically "roll-over" the amount outstanding into a new loan. This can result in an exponentially growing debt to the lender.
Typical terms are 15 to 30 days. Payday loan amounts can range from $100 to $500. Most jurisdictions now have regulations that limit the fees charged by payday lenders.