What you'll find here

When you think about loans, you might think it's just about borrowing money; and when you're ready, paying it back. While that's true, the details can get a little more complicated than that. Here, we'll break it all down so you can make the most informed choices.

Loans 101

Before you apply for a loan, make sure you're clear on how they work, how they're different, and what you can expect from the application process.

Difference between a secured loan and unsecured loan?

A secured loan has some form of collateral attached to it. The most common types of secured loans are mortgages and auto loans, where a home or car serves as collateral. If you default on the loan, the lender can collect the collateral in its place. An unsecured loan has no collateral attached. The most common types of unsecured loans are student loans, personal loans, and credit cards.

Difference between interest rate and APR?

Borrowing money costs money. The interest rate is the cost of borrowing the principal amount of a loan, and most likely what you'll focus on first when choosing a lender. However, this percentage doesn't include additional costs, like broker fees and closing costs on a mortgage. That total cost percentage is included in the APR, which stands for the annual percentage rate. So if the interest rate is a piece of the loan pie, the APR is the entire pie.

What is loan amortization?

Loan amortization is when your repayments are broken down into equal and regular (usually monthly) installments over time. These regular payments help to pay down interest as well as the principal cost over the lifespan of the loan. The goal is to have your balance be at zero by the time your loan's lifespan runs out. And your ability to pay the monthly installments is a good indicator of whether or not you can afford a particular loan.

How does a down payment affect my loan?

A downpayment helps by reducing the amount you'll have to borrow up front. Most mortgage lenders will require a minimum down payment, typically anywhere between 10 and 20 percent of the purchase price. But if your down payment is less than 20 percent, you may also be required to obtain private mortgage insurance.

Latest Loans Articles

The Best Same-Day Loans of 2020

When you need money fast, a same-day loan provides a solution and there are many types of such loans. Read…

Beth Casey
Jan 17, 2020
Graduate Plus Loans

If you’re thinking about finishing your education, a Graduate Plus loan might be the funding answer you're looking for. Here’s…

Beth Casey
Jan 17, 2020
Subsidized vs. Unsubsidized Loans

Subsidized and unsubsidized loans provide college students with fixed interest loans through the U.S. Department of Education.

Ashley Mott
Jan 15, 2020
Student Loan Forgiveness

Get a better plan for tackling your student loan debt; discover the ins and outs of student loan forgiveness, discharge,…

MacKenzie Ryan
Jan 15, 2020
Boat Loans and Financing

Boat installment loan options range from short-term unsecured loans for motorboats to multi-million-dollar 20-year loans for yachts.

Ashley Mott
Dec 16, 2019
Amortization Explained

Understanding how your loan payments are calculated and figuring out how much you’re paying in interest doesn't need to be…

Courtney Leigh
Dec 16, 2019