When you are first learning about credit and loans, you will need to know what types of loans there are. The most popular type of loans are installment loans. These are loans that you will pay back each month, or on another regularly set schedule. There are a number of popular loans that are considered installment loans. Here are some of the general types and how they ordinarily work.

Auto loans

 Car loans are one of the most popular types of installment loans and one of the easiest to receive. Due to auto loans having automatic collateral in the form of a car, there are many banks and financial institutions that are willing to give out automobile loans. The amount of the cost of your car and your interest rate will determine just how much you pay on your automobile loan. Most loans will charge by the month, but some pay as you go operations may charge you by the week or every two weeks in order to coincide with your pay schedule.

 

Student loans

 Another popular installment loan type is the student loan. People that are going to college will typically get student loans in order to pay for the cost of their education. Student loan payments are often deferred, or put off, until after the student graduates. After graduation, you begin to pay the loans back plus the accrued interest. There are loans that are given to students by the government and there are private loans that are offered by financial institutions. The payment that you owe will depend on the amount of the loan principle, plus any added interest.

 

Business loans

 One particular type of installment loan that is used less than the others is the business loan. Business loans are given by investors or by banks to those who are interested in opening a company. A business loan can be difficult to get, as you have to prove that your business will bring in enough money to pay off the business loan in the near future. Some business loans are due within the next month or two of taking out the loan, while others will give the recipient some time to set up the business and begin to pay.

 

Mortgage loans

 The loan that you take out on a home is considered a mortgage loan. Due to the nature of real estate and the amount that most mortgage loans are worth, mortgage loans are harder to qualify for than other loans. The amount that you are granted for a mortgage loan will depend on your income and your credit score. These loans tend to come in 15 or 30-year terms and are paid on a month to month basis. There are also ARM mortgages, which offer a low introductory rate but can raise depending on the market and may require a large balloon payment later on.

 

Personal loans (of all types)

 Personal loans come in different types including personal installment loans all the way to payday loans.  Financial institutions typically grant personal loans based on credit history, plus the collateral that you have available to put up for the loan. Payday loans are granted to those who have little to bad credit.