From a large home equity to a small personal loan to cover an unexpected expense, you might need a loan for any number of situations. However, the numerous options available make choosing the right one incredibly challenging. To pinpoint the right type, you need to evaluate your circumstances and needs. Find out how to achieve this task below.

A Guide to Loan Selection

What's the Purpose?

Which one you choose largely depends on what the money is going towards. For instance, a new vehicle purchase is best served by a car loan. A kitchen renovation would be considered home equity. However, there are also other categories that cover a wider range of needs.

For emergencies expenses or multiple purchases, a personal loan is a popular choice. In such cases, you apply for what you need, and the money is given directly to you to spend, rather than being allocated specifically for a car purchase or home renovations. If you don't qualify for an unsecured loan, you may have the opportunity to use your savings account as collateral.

What Are Your Needs?

One of your most significant deciding factors should be the length of repayment. Most loan types offer short- and long-term variations. For second mortgages, you have the option of 10- or 15-year terms while auto financing usually offers anywhere from two to six years. Personal loans, on the other hand, can have a set schedule of less than a year, with more time (up to five years) allotted for higher amounts.

To determine the right style of repayment, you need to consider your priorities. Short-term loans usually offer the benefit of lower interest, but long-term versions allow you to pay your bill off in smaller monthly payments. Estacado has NO Pre-Payment fees! While it costs you less overall to pay your debts faster, never choose an option that strains your budget more than you can handle.

Find the right loan for your circumstances at Estacado Federal Credit Union in Hobbs, NM. For over 65 years, the credit union has offered a variety of financial services for its members throughout Lea County. From online banking to second mortgages, their dedicated team can help guide you through the process. Apply online, visit a branch in Hobbs or Lovington, or get one-on-one assistance by calling (575) 393-1596.