Types of Loans: 6 Options Worth Exploring in 2025

Loans allow you to borrow money for virtually anything, from debt consolidation to starting a business to covering a financial emergency. Let’s look at the most common types of loans to help you decide which one is right for your needs.

Type of loan	Rates*	Fees	Best for
Personal loan	6.49% – 35.99%	Origination, late payment, prepayment	Debt consolidation, large purchases, emergency expenses
Mortgage	5.92% – 6.75%	Origination, appraisal, late payment	Buying or building a home
Home equity loan/HELOC	6.35% – 14.90%	Origination, appraisal, late payment	Home improvements, debt consolidation, large expenses
Auto loan	6.78% – 12.01%	Origination, registration, late payment	Buying a new or used vehicle
Small business loan	6.60% – 11.50% for bank loans; rates vary for online loans	Origination, late payment	Starting a new business or funding an existing one
Student loans	6.53% – 9.08% for federal loans loans; 3.24% – 17.99% for private loans	Origination, late payment	Funding undergraduate and graduate education

Rate ranges in July 2025.

Table of Contents

How to compare types of loans
6 types of loans
Other types of loans
Find the right loan for you needs
FAQ

How to compare types of loans

Loan shopping can help you get a sense of what’s available and which lender or loan may be right for your needs. Here are the most helpful factors to weigh as you compare different types of loans.

Rates. Interest rates measure your cost of borrowing money. This is typically expressed as an annual percentage rate (APR), which includes both the interest rate and certain fees, giving you a clearer picture of your total borrowing cost Personal loan interest rates and other loan rates are usually lowest for people with the highest credit scores.
Fees. Lenders can charge fees in addition to interest. Common loan fees include origination fees, prepayment penalties, and late fees.
Term. Your term length is how long you’ll take to repay the loan, measured in months or years. A longer term can mean a lower payment, but you may pay more interest overall.
Collateral. Collateral is something of value that’s used to secure the loan. Home equity loans, for example, use your home as collateral. Comparing rates, fees, and terms for secured versus unsecured loans can help you decide which one fits your situation.

Consider your monthly payments when all the above factors are accounted for. A loan payment calculator can help you estimate what you’ll pay for different types of loans, based on your rate and repayment term.

6 types of loans

1. Personal loans

Rates: 6.49% – 35.99%
Eligibility: Approval is typically based on credit scores and income, with most lenders requiring a score of 560 or higher.
How easy is it to get approved? Varies by credit score range. In general, personal loans are easier to qualify for than mortgages or home equity loans, which often require higher credit and income standards. However, they may be harder to get than auto loans or federal student loans, which have built-in collateral or federal backing.
Best for: Those with good to excellent credit who want an unsecured loan for debt consolidation or large expenses.
Best place to shop for personal loans: Credible

Credible is an online marketplace that allows you to compare loans from multiple lenders in one place. You can get rate quotes and compare terms without affecting your credit scores.

Personal loans can go by different names, depending on their intended use. For example, lenders may offer:

While the names vary, these are all types of personal loans. Explore more of the best personal loans for different needs.

2. Mortgage loans

Rates: 5.92% – 6.75%
Eligibility: Based on credit scores, income, debt-to-income ratio (DTI), and your down payment. Minimum credit score requirements vary by mortgage type.
How easy is it to get approved? Moderate to difficult
Best for: People who want to buy a home or finance the building of one.
Best mortgage lender: SoFi

SoFi makes it easy to compare rates and apply for a mortgage online. You can find loans with down payment requirements as low as 3.5%. SoFi’s close-on-time guarantee ensures that you’ll make it to the closing table by your scheduled date.

You can apply for several types of mortgages, including conventional loans, FHA loans, or VA loans using SoFi’s online application. If you’d like to compare rates from other lenders, check out our top picks for the best mortgage loans.

Reverse mortgages

Reverse mortgages let homeowners 62 and older borrow against their equity. Instead of you paying a lender, the lender makes payments to you. A reverse mortgage is only repaid when you sell the home or pass away.

A reverse mortgage can supplement a pension plan, Social Security benefits, or other retirement savings. You’ll need to meet the age requirement to qualify, have good credit, and have paid off most or all of your mortgage.

Learn how much you can get from a reverse mortgage, or compare the best reverse mortgage companies.

3. Home equity loans/HELOCs

Rates: 6.35% – 14.90%
Eligibility: Lenders typically require a credit score of 620 or better and sufficient equity
How easy is it to get approved? Moderate to difficult
Best for: Homeowners who want to leverage their equity for home improvements, debt consolidation, or large expenses.
Best home equity/HELOC lender: Figure

Figure offers a 100% online application process, with approval in as little as five minutes. You can borrow $15,000 to $750,000 with a home equity line of credit. Your maximum credit limit is based on your credit scores, income, home value, and other factors.

What’s the difference between a home equity loan vs. HELOC?

A home equity loan lets you borrow a lump sum that you repay over time. Typical home equity loan repayment lasts 10 to 30 years, and interest rates are fixed.
A HELOC works similarly to a credit card: You get a flexible line of credit to draw against as needed. Rates may be fixed or variable, depending on the lender.

Home equity sharing agreements offer an alternative to home equity loans and HELOCs. With this type of arrangement, you agree to give a lender a future stake in your home’s value in exchange for cash today.

Read more about the best HELOC lenders and rates.

4. Auto loan

Rates: 6.78% – 12.01%
Eligibility: Lenders may look for steady income, but minimum credit score requirements are usually flexible
How easy is it to get approved? Easy to moderate
Best for: People who want to buy a new or used vehicle and have fair credit or better.
Best auto loan lender: LightStream

LightStream offers loans up to $100,000 to buy a new or new-to-you vehicle. There are no appraisal, age, or mileage restrictions, and you can get loan funds the same day you’re approved.

See our list of the types of auto loans.

What if you’re not buying a car? That’s where these auto financing options come in:

Get the full rundown on the best auto loans, including terms, rates, and fees.

Personal Loan vs. Auto Loan to Buy a Car
Should You Buy a Car With a Home Equity Loan or Car Loan?
How to Refinance an Auto Loan

5. Small business loans

Rates: 6.60% – 11.50% for bank loans; rates vary for online loans
Eligibility: Lenders typically consider credit scores, time in business, and annual revenues for approval decisions.
How easy is it to get approved? Moderate to difficult
Best for: New and established businesses that need capital for day-to-day expenses or long-term growth.
Best place to shop for small business loans: LendingTree

LendingTree is a loan marketplace that connects borrowers with lenders who need business financing. You can review loan options and get rate quotes with no impact on your credit. LendingTree partners with a variety of lenders to offer small business loans with terms to suit every need.

There are different types of loans you can use to start or fund your business, including:

SBA loans
Equipment loans
Inventory loans
Accounts receivable loans
Merchant cash advances

You can also find loans for specific types of businesses. For example, if you need cash to launch a food truck business, you might qualify for a loan to do that.

As you compare the best small business loans, take note of rates, fees, and collateral requirements. Learn more in our guide to how small business loans work.

6. Student loans

Rates: 6.53% – 9.08% for federal loans loans; 3.24% – 17.99% for private loans
Eligibility: Federal loan eligibility is based on citizenship and enrollment status; private lenders may consider credit scores and income.
How easy is it to get approved? Easy to moderate
Best for: Federal student loans let students and parents borrow for school. Private loans can help cover gaps not filled by federal loans.
Best private student loan lender: College Ave

College Ave offers both undergraduate and graduate student loans to help you meet your school funding needs. You can get loans to pay for medical school if you’re training to become a physician, or borrow up to 100% of your cost of attendance to pay for veterinary school.

Are federal or private loans better?

Federal student loans offer fixed interest rates with no credit score requirements. They also come with deferment and forbearance periods, income-based repayment options, and the opportunity to qualify for loan forgiveness.
Private student loans can have fixed or variable rates. Lenders may offer flexible repayment terms and deferment or forbearance periods.

Compare the best student loans if you need money for an upcoming enrollment, or learn which companies are the best for student loan refinancing if you already have education debt.

Other types of loans

So far, we’ve covered the most commonly used types of loans. But there are a few more ways to borrow:

We don’t recommend the loan types mentioned below unless it’s an absolute last resort.

Guaranteed approval loans. These loans promise you that you’ll be approved instantly, regardless of your credit. Some lenders may claim there’s no credit check at all to qualify.
Payday loans. Payday loans let you get an advance against your next paycheck. You then pay it back to the lender, with a fee, when you get paid again.
Title loans. If you own a car, you could use your title as collateral for a loan. The lender holds your title until you repay what you owe.
Pawn loans. Pawn loans let you get small amounts of cash for your personal collateral, and you might use your gold jewelry or a gaming console as collateral. Just like a car loan, you get your property back when you repay the loan.

The only positive about these kinds of loans is that they’re convenient and easy to get. Any of these loans can put cash in your hands in an hour or less.

The downside, however, is that these loans can be ruinously expensive. The effective APR for a payday loan, for example, can approach 400%. That’s 10 times what you might pay for a personal loan with bad credit, assuming a max rate of 35.99%.

These loans are predatory because lenders that offer them bank on people being desperate for money. They can lead to a cycle of debt or the loss of your property if you can’t pay them back. Bottom line: They’re best avoided at all costs.

Find the right loan for you needs

Loans can help you move forward with your financial goals or just get through an unexpected emergency if life throws you a curve ball. Comparing the different types of loans can help you understand what each one is designed to do for you.

Learn how to improve your credit so you can qualify for the lowest loan rates.

FAQ

Which types of loans have the lowest interest rates?

Mortgages usually have the lowest interest rates among common loan types because they’re secured by your home and repaid over a longer term, which reduces the lender’s risk.

In general, the lowest rates go to borrowers with strong credit, and secured loans (like mortgages or auto loans) tend to offer lower rates than unsecured loans (like personal loans or credit cards).

What kind of loans can you get with bad credit?

If you have bad credit, you could still qualify for personal loans, either secured or unsecured. You may also be able to get a car loan with bad credit, or even a mortgage. FHA loans, for example, have a minimum credit score of 500 if you put 10% or more down on the home.

Which is better, secured or unsecured loans?

Secured loans are better for larger purchases or if you want to get a lower rate. For example, you’ll need to use your home to secure a mortgage loan, home equity loan, or HELOC. Unsecured loans are better when you don’t have collateral to offer.