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Private or Government Loans

The US government offers a number of loans to financially assist certain people, businesses and organizations. Most of these loans are specialized to certain groups, like FSA (Farm Service Agency) are geared towards farmers and ranchers; the FSA (Federal Student Aid) for students and SBA (Small Business Administration) for small business owners.

However, not all will qualify for government loans. Each loan-giving body has its own set of requirements that you should satisfy in order to qualify for their financial assistance. Sometimes, you need a loan so badly that looking for loans that are easy to qualify for becomes the next logical step.

In this essence, you can look for private loans offered by alternative lenders as replacement for government loans that can’t qualify for. One clear advantage about working with private lenders is that they have more lenient criteria for qualification.

Basically you only have to be 18 years old and above, an American citizen with a regular job and an active bank account. Some lenders will require your Social Security number, valid IDs and proof of income.

There are also a number of private loans to choose from. You can decide whether to go for short-term loans like cash loans and online loans, or for installment loans like personal loans. You can also decide between secured and unsecured loans. Furthermore, each lender charges different interests, fees and penalties.

Like federal loans, the same rules apply for private loans. One, you need to read and understand each condition of the loan. Lenders can have the right to seize your collateral or roll over the interests if you fail to meet the deadline of payments or default on your loan. You should also remember that how your behavior with private loans can also have an impact on your credit rating.

Private loans also tend to process loan applications quickly. If you file for a loan today and get approved, you can get the amount in your bank account in just a matter of hours. With this kind of speed and convenience, you must remember that private loan lenders charge higher interests than federal loans.

Since you would be paying more in interests, you should be responsible in taking out private loans, or any other loan for that matter. The first rule would be to determine if your financial problem really needs a loan as a solution. There are other ways to raise money, but they may not be as quick as getting a loan. If your situation doesn’t call for cash immediately, you might want to set aside private loans as your last resort.

You shouldn’t also take a loan amount that you can’t afford. Consider how much you’re earning, what your expenses and what the additional loan payments would mean to your budget. Don’t charge an additional $200 on your loan amount just so you can buy a new pair of shoes when instead you should just be using the loan for medical expenses.
You might find private loans too appealing because of their ease, speed and convenience. But do remember any loan comes with a cost. Use the loan wisely and properly and it will prove to be a great tool to help build your finances.