Loans in Texas. Types of Loans and How Do They Work

Texas is free from any credit restrictions, so you can take out any loan that suits you best. Here are a few most popular ones so you know how they work and which is best for your situation.

Personal loan

A personal loan is a long-term financial product that can be secured or unsecured. Personal loans are suitable for many occasions: weddings, relocations, significant purchases, renovations, vacations, or medical bills. In a word, for almost any need that you may have.

The terms of a personal loan can vary depending on the amount you are borrowing and the lender. Typically, personal loans provide access to funds from $1,000 to $50,000 for up to 72 months.

A personal loan has a fixed rate and is repaid in monthly installments that do not change throughout the entire term of the loan.

Payday loan

A payday loan is a short-term unsecured loan. Often, these loans cover unforeseen expenses, especially those that require an urgent solution.

A payday loan usually has a limited amount - often up to $ 500, rarely - up to $ 1,000 for 14 days or a month.

Such loans can be obtained within 24 hours; even for people with bad credit history, you just need to prove your income and convince the lender that you can repay the entire loan amount with interest on time.


A mortgage is a long-term secured loan that is intended solely for the purchase of the real estate. The house, apartment, or plot of land you bought with a mortgage will act as collateral until you repay the loan. The most common mortgage terms are 15, 20, and 30 years.

There are several types of mortgages, but the most popular are fixed-rate and adjustable-rate mortgages. In the case of a fixed-rate mortgage, the rate does not change throughout the life of the loan. In the case of an adjustable-rate mortgage, the rate remains the same for the first few years, but after that, it can be increased following fluctuations in bank rates.

Student loan

A student loan is intended for those receiving an education and lacking the money to pay for it. Student loans are usually unsecured and long-term.

Such loans are federal and private. Federal student loans, in turn, can be subsidized or unsubsidized. People with financial problems can obtain subsidized federal student loans, which offer deferrals and grace periods. Unsubsidized federal loans are available without additional conditions but with other benefits.

For almost all federal loans, credit history is not essential. Federal loan rates are generally lower than private student loans.

Private student loans require the borrower to have a good credit history and proof of income. They have higher interest rates and less flexible terms.

Auto loan

An auto loan is a long-term secured financial product designed to purchase a vehicle. Contrary to the name, with the help of an auto loan, you can buy a car and a motorcycle, a boat, and other means of transportation.

Auto loans have relatively long repayment periods, up to 84 months, and low-interest rates. These loans are available for both new and used cars.

Home Equity Loan

A home equity loan is a long-term loan backed by collateral, which is your home. With this loan, you can get a large amount of money in one payment and repay it over 10 to 30 years.

With such a loan, you can get up to 75% of the value of your home at a time.