Understanding Government Personal Loans

Government personal loans can be used for a variety of reasons. They are also offered to a variety of individuals. And, while there are definitely many benefits to using government personal loans to handle your current financial need, there are also some disadvantages that you should be aware of.

Educating yourself on the different types of loans, government and non-government can help you decide which type of loan is best for you. You should consider your future as well as your present. By taking this type of approach, you can minimize the chance that the type of loan you choose ends up being a mistake.

Consider the pros and cons. Consider your plans for the future as well as any road blocks that may come up along the way. Most of all, understand how each type of loan works in regards to approval, repayment, interest, and terms.

Types of Personal Government Loans

It is important that you apply for the right type of government loan. This will help you avoid the frustration of getting denied because you applied for the wrong loan. It will also save you from having to start the process completely over and waiting longer for a loan decision.

A disaster relief loan can be applied for by both individuals and farmers. For family farmers, this can be especially important. In most cases, their only source of income is their farm. If a natural disaster occurs and wipes out their home, crop, or both, it can very quickly mean financial ruin as well. Unlike individuals, farmers cannot just continue working after a natural disaster like most individuals. This is exactly what makes the disaster relief loan so valuable. There are specific guidelines that farmers must meet, including at least a 30 percent loss in crop yield. However, if granted, the loan can help replenish livestock or crops. It can also be used to pay for the repair or rebuilding of buildings, homes, or other structures.

Renters and homeowners that do not own a farm may also apply for a disaster relief loan if they experience a loss during a natural disaster. For homeowners, the loan is designed to cover any cost that is not covered by insurance and can be used to repair or rebuild the home to its original state. It cannot, however, be used to make upgrades to the home, unless the upgrades can prevent damage from future disasters. Renters and homeowners can also apply for a government disaster loan to replace personal property lost in a natural disaster. This type of loan, however, cannot be used to replace real estate or luxury items.

Educational Loans

A wide variety of educational loans are offered through the government. There are programs that will allow you to perform research in exchange for government education assistance. There are consolidation loans for individuals that have already completed their schooling. There are subsidized and unsubsidized government loans. The information on these loans is too extensive to cover in this current article so it is suggested that you take the time to research each one individually.

Housing Loans

The government also offers a wide variety of loans for potential and hopeful homeowners. There are basic FHA home loans, which are targeted towards first time homeowners. There are loans designed for individuals that are at risk of losing their home to foreclosure, otherwise known as “Hope for Homeowners.” There are home loans for Indian families. There are loans designed specifically for purchasing a manufactured home. Once again, the number of loans offered would take a great deal of time. If you need a home loan, it is suggested that you take the time to carefully review each of the home loans offered through the government to decide if there is one right for your specific needs.

Veteran Loans

Veterans are extended very low interest loans through the government. Veterans can apply for refinancing home loans, home loans, and life insurance loans. A refinancing loan can be used to help refinance the home of any veteran, whether the home is currently a veteran loan or not. Regular home loans can be used to apply for a home loan. Veterans can sometimes qualify for these loans with zero money down. Life insurance loans allow veterans to borrow against their existing life insurance policies with the VA.

Advantages and Disadvantages to Government Loans

There are many advantages to applying for a government loan. The main advantage is that government loans are often offered at a much lower interest rate than conventional bank loans. Approval is also often easier with government loans, which means that some individuals with not-so-perfect credit may qualify.

The main disadvantage is that the government has more venues to use to gain repayment if you fail to make your payments on time. They can withhold your income taxes and can often get ruling in their favor for garnishing your wages. Consider very carefully before applying for a government loan whether or not you will be able to make your payments on time.

How to Find Low Rate Personal Loans

It doesn’t really matter why you need a personal loan or what your credit it is, finding the lowest personal loan rate can save you tremendous amounts of money. However, there are some steps that you have to take to ensure that this happens. This, of course, takes a great deal of time and effort. But, if you are persistent and work hard, the money you save will make you glad that you made the effort.

Make Lenders Compete

Comparison shopping is smart shopping. Visit as many lenders as you can. Check online, at banks, and at credit unions. Let lenders know, right off the bat, that you are comparison shopping. While you don’t want to disclose specific rates or amounts to your lender, you can let them know when they provide you with terms that are less favorable than another lender. You might be surprised at how quickly lenders are willing to bend over backwards to try and accommodate you so that they can gain your business.

Don’t Fall for the Old Switcheroo

Finding the lowest interest rate isn’t always the best approach when it comes to personal loans. Sometimes, lenders will offer you a lower interest rate but will place terms in the fine print that increase their earnings. This can include prepayment penalties, monthly fees, administrative fees, and more. Check the fine print of all types of loans carefully. Check for additional fees that the lender doesn’t mention. Question anything that you don’t understand. All of these tips will help you avoid falling for the old switcheroo.

Don’t Limit Your Options

Many individuals limit their lenders to just local banks and credit unions. And, while providing your local businesses with business is always a good thing, it can sometimes really pay off to check around. The digital world has made it possible for individuals to find lenders all over the country, many of which might be able to offer you a better rate and better terms than what you can find locally.

You may also want to consider what is known as peer-to-peer lending. This type of lending often provides a lower interest rate because the risk is much lower. This is because, instead of one bank or lender, you have several lenders that pitch in to meet your financial requests. This type of lending is not very well known but it is definitely an option that provides one of the most favorable interest rates when it comes to personal loans.

Before you can apply for a peer-to-peer loan, however, there are certain requirements that you must meet. One of the most important things that you will need is a detailed account of how you plan to use the money. This includes more than just the spending but also why you need the money. This can include any number of reasons but it is important that you try to be honest. This will help to develop your creditability.

You should also be aware that you will still have to meet other lending qualifications, like a favorable credit score and adequate income. Having this information on hand when applying for the loan can help make the process go much easier.

All in all, you are likely to find that a peer-to-peer loan is easier to qualify for, even if you are required to provide more information. Just be sure that, if you choose to go this route, you are protected. Contact a professional financial advisor before getting a loan online. Doing so can help you avoid identity theft or internet fraud.

Don’t Get Discouraged

Even if you find that getting qualified for a low interest personal loan is difficult, remember that there is a lender out there for almost every borrower. If it is a lack of collateral, try increasing your income slightly by taking a part-time job. If it is your credit, consider checking into poor credit lenders. There is almost always a solution to the barrier that you are facing in getting a low interest personal loan. And, if not, then consider a conventional loan, if your financial need is serious.

Avoid Damage to Your Credit

Each time you visit a lender, your credit score will drop. This, however, can sometimes be avoided. Try obtaining a copy of your credit report on your own. Take this credit report to every lender you apply at. If you are applying online, send it via email or fax. While the lender may still want to pull your credit before finalizing the loan terms, your copy may be enough to provide you with a pretty clear picture of what your loan terms will look like. This will help protect your credit score from multiple hits while you do your lender comparisons.