When it comes to the modern economy, credit and lending make up a huge part of it all. Without a good credit score and ability to gain access to capital, you won’t be able to excel and create more wealth like others do.

Whether you are buying a house or starting a business, there are plenty of loans to help you make a purchase or pursue larger wealth. Below are four different types of loans and how you can use them.

Business Loans

Of course, one of the most popular loan options is for business. When you are thinking about starting a business, there is plenty to do and so much to keep in mind. There is so much to buy and pay for, especially when you are trying to expand the business.

Business loans come in many different loan sizes, terms, and interest. They can be public or private. For example, you could apply for a loan from a bank or from the government for public subsidies.

A standard business loan could have varying interest rates, but anything you get from the government could be more advantageous. It all depends on what kind of business you are starting, how valuable it is to the community, and what kind of lender will be interested in investing in your company. Still, despite all the complications business loans are quite helpful when you are getting a business going.

Home Loans

Home loans are quite complicated. There are many different types of loans when it comes to buying a house. The amount you can put down on the home and the status of your credit score will all impact your ability to get a home loan. Of course, putting down more money upfront will help you get favorable loan terms, interest, and payments. If you have already bought a house with a mortgage loan and need more money in your pocket every month, you can choose to refinance.

There are technically two options when it comes to refinancing. If you look at the benefits of cash out refi vs. HELO, you can see which option is best for you. A cash out refinance enables you to take advantage of the equity you have already built on the house. It is when you take out a mortgage that is larger than the initial loan you took out. Unlike a second mortgage, cash out refinance doesn’t add additional monthly payments.

On the other end, the HELOC, or home equity line of credit, is essentially a second mortgage. This loan opens another line of credit. You will have another payment to make every month. It is another loan that you receive when you need money, but it will also require you to make an additional payment each month. With home loans, there are many different options and ways to use the capital. You should always, of course, choose the right loan for your situation.

Personal Loans

Personal loans are just that–money used for personal reasons. One of the best parts of personal loans is that they can be used for whatever you want to use it for. There are two different types of personal loans. These are secured and unsecured.

Secured loans are secured because they require collateral. For example, if you are taking out a car loan and don’t have good credit, you can use the automobile itself as collateral. However, if you fail to make the payments on time you could be in the position where your car could be repossessed by the lender. Secured loans are helpful but they can also be detrimental if you don’t pay the money back on time.

Unsecured loans don’t require collateral. To be approved for an unsecured loan you need to have good credit. With a good credit score, you’ll receive more money and a lower interest rate. In May 2022, the average APR was 8.73 percent but it could be as low as six percent or as high as 36 percent. Personal loans range so much, but if you can get access to funds with good terms and a low interest rate, why not take advantage of it?

Debt Consolidation Loans

On the other end of the spectrum, when you have already taken out loans and are struggling with debt to various creditors you might think about applying for a debt consolidation loan.

A debt consolidation loan is lending that pays for all your existing balance and puts them in a single account. This allows you to create one single interest rate and monthly payment. When you don’t know what to pay first, when each payment is, and what interest rate is highest, think about a debt consolidation loan.

Whatever your situation is, loans are very helpful. You need to pay attention to the loan terms and interest rate, and you need to pay the money back on time, but if you have a game plan you can use loans to your benefit and avoid the pitfalls, you will be able to better your life. When you are looking for a way to create more wealth or get out of a bind, find the right loan for you.