Different Types of Loans You Can Get

A loan is money you borrow and pay back over time, usually with interest.

The main types of loans include personal loans, student loans, auto loans, mortgages, lines of credit, business loans, and short-term loans.

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1) Personal Loans

A personal loan is a set amount of money you borrow and repay in fixed payments.

• Unsecured personal loan: No collateral required (common, but interest can be higher)

• Secured personal loan: Backed by collateral (can be easier to qualify for)

Common uses: emergency expenses, moving costs, big purchases, consolidating debt.

2) Student Loans

A student loan helps pay for school costs like tuition, books, and living expenses.

• Can be government (provincial/federal) or private

• Repayment often starts after school (depends on the loan)

Common uses: education and training.

3) Auto Loans

An auto loan is used to buy a car. The car often acts as the “security” for the loan.

Common uses: buying a new or used vehicle.

4) Mortgages

A mortgage is a loan used to buy a home.

• Usually the largest loan people get

• Typically repaid over many years

Common uses: buying property.

5) Line of Credit

A line of credit is a flexible borrowing limit you can use as needed.

• You only pay interest on what you use

• Often used for ongoing or unpredictable expenses

Common uses: emergency backup, renovations, cash flow.

6) Credit Cards

Credit cards are a type of borrowing too.

• You borrow up to a limit

• If you do not pay the full balance, interest can be high

Common uses: everyday spending, online purchases, travel.

7) Payday Loans and Other High-Cost Short-Term Loans

These are small loans meant to be repaid quickly, but they can come with very high fees and interest.

Common uses: short-term emergencies (but they are risky and can be hard to escape).

8) Business Loans

Business loans help pay for business costs.

Common uses: inventory, equipment, hiring, marketing, or opening a new location.

Quick Tip Before You Borrow

Before getting any loan, always check:

• The interest rate

• Any fees

• The total cost (how much you will repay overall)

• The payment amount and due dates