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.