Different Types of Loans?

Posted on October 19, 2007 @ 5:15 am

I always figured a loan was a loan.  If you needed money, you could borrow it under some sort of terms and that would be called a loan.  At least, that was the definition that I had in my head.

My friends didn’t seem to know any better.  Some of my buddies who had loans in the past didn’t give them special names, rather they used loans as a blanket term to describe the financing.

Well, my whole world was turned upside down when I went to college.  I thought I was really smart in my finance class when I told everyone that whether you were borrowing to buy a house, a car, or renovating your home, the product you needed was called a loan.  After a quick chuckle, the professor proceeded to tell us:

"There are many types of loans."

We touched on many of them in class: mortgages, secured homeowner loans (that is usually used for renovations), and unsecured loans (like a car loan).  I walked out of that class with a bit of a headache – I never realized that it was so complicated.  I am going to have to review my notes to get a grasp on the subject.  At least now, when I go get a car loan at some point, I won’t sound so stupid 🙂

Leave a Reply