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Usually, people try to avoid debt, but in some situations, borrowing money can be beneficial. Moreover, with the help of borrowed money, you can even get rich. For example, if you take a loan and use it for the following reasons:
- You can improve education;
- You can start your own business;
- You can use this money for a profitable investment.
What is an installment loan for consumer purposes? One may need to, for example, buy a car. A car will help you get to work faster, but it is unlikely to bring you any profit. Below we provide a shortlist of loans used in the USA, as well as give recommendations on how to obtain them.
College tuition prices are rising so fast that they are even ahead of inflation. An average cost for a four-year college education is $127,000. This price includes payment for tuition, as well as accommodation, meals, textbooks, transportation, and other expenses. It is very difficult for middle-income families to find funds to educate their children in college, but you can still do it.
Usually, parents accumulate part of the money for studying in advance. Often, students earn extra money in their free time. Students showing outstanding academic or sports success receive a scholarship. And the best of them even receive federal grants. But this money can only be used for a small part of the education.
In this case, a loan comes to the rescue. On average, American students borrow more than $21,000 for college. In the United States, there are many types of student loans, including those common such as Perkins, Stafford, or PLUS. All these loans can be repaid after graduation.
The second advantage of student loans is their low interest. Although the interest rate depends on the selected loan, it usually lies in the range of 5-7%. The state also offers various periods for paying student loans. Some of them can reach 30 years. Although, of course, it is better to repay the loan earlier and not pay large amounts of interest.
Opening a new or expanding an existing business always requires additional cash. One way to obtain them is a commercial loan. Commercial loans are usually provided by banks, as well as by some other lenders.
To get a commercial loan, you must have a carefully designed business plan. It should reflect the direction of your business, contain data on available finances and planned expenses, describe the income generation scheme, management structure, and other necessary information. The lender will also request detailed information about your guarantors.
The guarantor for commercial loans is often the Small Business Administration. This government agency does not issue money itself but acts as a guarantee of their return to the creditor in case of insolvency of the recipient of the loan. At the same time, the responsibility for repaying the loan remains with the recipient, and the SBA actually only helps to get the right amount.