Aside from first mortgages (see ”How to Get the Right Mortgage,” Money, July 1986), they include home-equity lines of credit, margin accounts and automobile loans
(MONEY Magazine) The charge to borrowers these days: learn about lenders and what they have to offer. By doing a thorough credit check of your own, you are more likely to borrow on your own terms. To be sure, the rates on loans are low, and the range of offerings is wide. But how do you know which is the best place to go for a loan and which one to choose once you get there? Your purpose for borrowing, the amount you need, your ability to repay and your creditworthiness will dictate whom you can borrow from and the type of loan you get. Let’s say you need a loan to help pay for your daughter’s tuition at Pricey U. You head to Old Faithful Savings Loan downtown to apply for a Guaranteed Student Loan, but your family income is too high to qualify. The banker suggests a home-equity line. Unlike other college borrowing, all the interest is tax deductible. ”Great,” you say. The terms: a variable rate pegged at three percentage points over prime and closing costs amounting to 1.25% of the loan. Not so great. By scouting around you can do much better (see the home-equity loan table on page 172). And so it goes.
All loans fall into two broad categories, secured or unsecured. Secured loans use an item, commonly your home or car, as collateral. Unsecured debt includes personal loans, lines of credit and credit cards, and tend to carry higher interest rates. (For a detailed look at the most popular types of loans, see ”Four Credit Genies” on page 164.) Here’s a guide to help you pick the right loan for your purposes: