Updated November 2026 ยท National Loans USA is not a lender. How we make money.
The main types of loans are personal loans, auto loans, mortgages and home equity loans, student loans, business loans and short-term loans such as payday, title and pawn loans. They differ in three ways: whether you pledge collateral, how long you have to repay, and how much they cost. Short-term loans usually cost the most.
Each section below explains one loan type in a few lines and links to a full guide. The summary table near the end puts them side by side, and the red flag box lists the warning signs that apply to every type.
Personal loans
A personal loan gives you a lump sum that you repay in fixed monthly payments over a set term, usually a few years. Most are unsecured, which means you don’t pledge property. You can use the money for almost any legal purpose, such as a car repair, a medical bill or moving costs. The rate depends on your credit, income and existing debt. Our personal loans guide explains how to compare offers by APR and total cost.
Unsecured and secured loans
Every loan type is either secured by collateral or unsecured. A secured loan is backed by something you own, such as a car or savings, and the lender can take it if you don’t repay. An unsecured loan relies on your credit and income instead, so rates tend to be higher. See secured vs unsecured loans for a side-by-side comparison, or our unsecured loans guide for how lenders decide.
Bad credit loans
Bad credit loans are personal loans offered to borrowers with low or limited credit scores, at higher rates and often with fees. Some lenders in this market are careful and licensed. Others charge rates that make the loan hard to repay. Credit unions are worth checking first: federal credit unions are limited to 18% on most loans, a ceiling the NCUA extended through September 10, 2027. Read bad credit loans for options and traps.
Debt consolidation loans
A debt consolidation loan pays off several debts, such as credit card balances, and leaves you with one fixed payment. It only saves money if the new APR is lower than what you pay now and you don’t run the cards back up. Fees and a longer term can wipe out the saving. Our debt consolidation guide shows how to check the math before you apply.
Auto loans
An auto loan is a secured loan for buying a car, with the car itself as collateral. You can get one from a bank, a credit union, an online lender or through the dealer. Compare the APR and the total cost, not just the monthly payment, because a longer term lowers the payment but raises the interest you pay. If you fall behind, the lender can repossess the car. Read more on our auto finance page.
Mortgages and home equity loans
A mortgage is a loan to buy a home, secured by the home. A home equity loan or line of credit lets you borrow against the part of the home you already own. Both usually carry lower rates than unsecured loans because the house backs them. The trade-off is serious: if you can’t repay, you could lose your home. Closing costs also apply. See our mortgages guide for the main loan programs.
Student loans
Student loans pay for college or career school. Federal student loans come from the U.S. Department of Education and have fixed rates and repayment options set by law. Private student loans come from banks, credit unions and online lenders, and their terms depend on your credit or a co-signer’s. Consider federal loans first, because private loans usually don’t offer the same repayment protections, such as income-driven repayment plans.
Business loans
Business loans fund a company’s equipment, inventory, payroll or growth. Banks, credit unions and online lenders offer them. The Small Business Administration doesn’t lend directly in its main program: it guarantees part of 7(a) loans made by lenders, up to $5 million. SBA microloans go up to $50,000 through nonprofit lenders. Our business loans guide covers what lenders ask for.
Cash advances and payday loans
A cash advance is short-term money you repay quickly, often from your next paycheck. It can mean two different things. A credit card cash advance lets you withdraw cash against your card limit, usually with a fee and a higher rate than purchases. A payday loan is a small loan due in full on your next payday. The CFPB found the typical payday fee is $15 per $100 borrowed, which works out to an APR of about 391% on a two-week loan. State law decides whether payday loans are allowed and what they can cost. Read cash advance before you borrow.
Payday alternative loans from credit unions
A payday alternative loan, or PAL, is a small loan from a federal credit union. NCUA rules allow up to 28% APR on these loans. The PALs II version goes up to $2,000 with terms of one to 12 months, and the credit union can make the loan as soon as you become a member. You repay in installments instead of one lump sum.
Car title loans
A car title loan is a short-term loan that uses your car’s title as collateral. You keep driving the car, but the lender can take it if you don’t repay. In a 2016 study, the CFPB found the typical title loan was about $700 at an APR of about 300%. More than four in five were renewed on the day they were due, and about one in five borrowers had their vehicle seized. Details are on the CFPB’s title loan findings page.
Pawn loans
A pawn loan is a small loan secured by an item you leave with the pawn shop, such as jewelry or a tool. If you repay the loan and fee on time, you get the item back. If you don’t, the shop keeps it and sells it. Pawn loans can be expensive, but the shop takes only the item you left, not your car or paycheck.
Credit builder loans and secured cards
A credit builder loan helps you build a payment history rather than giving you cash today. The CFPB explains that the lender holds the loan amount in savings while you make small payments, usually over 6 to 24 months, and you get the money at the end. A secured credit card works in a similar spirit: your cash deposit sets the limit. Ask whether the lender reports to all three credit bureaus.
Types of loans compared
The cheapest loan types tend to be secured by a home or car and repaid over years. The most expensive tend to be small, short-term loans due in one payment. The table sums up each type.
| Loan type | Collateral | Typical term | Relative cost | Main risk |
|---|---|---|---|---|
| Personal loan | Usually none | Months to several years | Low to high, based on credit | High APR if credit is weak |
| Debt consolidation loan | Usually none | Several years | Low to high, based on credit | Costs more if the APR or term isn’t better |
| Auto loan | The car | Several years | Low to moderate | Repossession |
| Mortgage or home equity | The home | Up to decades | Low, plus closing costs | Foreclosure |
| Student loan | None | Years | Federal: set by law; private: based on credit | Long repayment period |
| Business loan | Varies | Months to years | Varies by lender and program | Personal guarantee may be required |
| Credit union PAL | None | 1 to 12 months | Up to 28% APR | Must join the credit union |
| Payday loan | Access to your bank account or a check | Often two weeks | Very high (about 391% APR in CFPB data) | Rollovers and repeat borrowing |
| Car title loan | Your car’s title | Short, often one payment | Very high (about 300% APR in CFPB data) | Losing your car |
| Pawn loan | An item you leave at the shop | Short | High | Losing the item |
Example: Say you need $650 for a car repair. The figures below are illustrative. Fees and rates depend on the lender, your state and your credit.
- Payday loan at $15 per $100: the fee is $97.50 for two weeks, so you owe $747.50 on payday. If you can only pay the fee and roll the loan over four times, you pay $487.50 in fees over ten weeks and still owe the $650.
- Credit union PAL at 28% APR over 6 months: the payment is about $117.35 a month. You repay about $704.10 in total, or $54.10 in interest.
If you’d like to see offers from lenders, you can compare offers through our loan request form. We’re not a lender. Lenders set the rates and terms, may check your credit, and submitting a request doesn’t guarantee an offer.
⚑ Red flag: These warning signs apply to every type of loan, from a payday loan to a mortgage.
- You’re asked to pay a fee before you get the loan. The FTC warns that legitimate lenders don’t guarantee a loan in exchange for a fee.
- The lender promises approval before it has looked at your credit or income.
- The offer pushes you to roll over or renew a short-term loan instead of paying it down.
- The lender isn’t licensed in your state or won’t give you its full name and address. Read advance-fee loan scams for the common scripts.
Frequently asked questions
What is the cheapest type of loan?
Loans secured by a home or a savings account usually carry the lowest rates, because the lender can recover the collateral. Among unsecured options, credit union loans are often cheaper, since federal credit unions are limited to 18% on most loans. Your actual rate depends on your credit, income and the lender.
What is the most expensive type of loan?
Short-term loans due in one payment are usually the most expensive. CFPB research found typical payday loans cost about 391% APR and typical car title loans about 300% APR. Repeat borrowing makes them cost even more, because each rollover adds a new fee.
Which type of loan is easiest to get with bad credit?
Secured loans and credit union loans are often easier to get with bad credit, because collateral or membership lowers the lender’s risk. No loan is guaranteed, though. Be wary of any lender that promises approval for everyone, which the FTC lists as a common sign of a scam.
What is the difference between an installment loan and a payday loan?
An installment loan is repaid in equal payments over months or years. A payday loan is due in one lump sum, usually on your next payday. Spreading the cost out makes installment loans easier to repay. Many payday borrowers end up paying the fee again and again to roll the loan over.
Do all loan types check your credit?
Most lenders check your credit before they approve a loan, and a formal application usually causes a hard inquiry. Pawn loans often don’t, because the item covers the debt. A lender that says it never checks anything should make you look closely at the price and the terms.
