It can be intimidating to shop for loan products when there are so many options available. However, most loans are designed with specific uses in mind. Two primary lending categories are commercial and consumer loans, and each of these offers a range of options. Here's a closer look so that you can choose the best option for your needs. 

What Is a Consumer Loan? 

Consumer loans are issued to individual borrowers. There are many types available, such as credit cards, mortgages, auto loans, and personal loans. People typically apply for these to fund specific items, like a home, car, or everyday purchases for their household. 

Consumer loans can be secured or unsecured. Secured loans are backed by an asset, such as a home for a mortgage or the vehicle that's purchased with the auto loan. Unsecured funds don't require collateral, so their interest rates are generally higher. 

To qualify for a consumer loan, your credit history, income, and current debts will be thoroughly reviewed to assess your ability to pay. You'll be approved for a particular amount and interest rate based on these metrics. Sometimes, borrowers will find an individual with better credit or a higher income to co-sign. Having a co-signer may allow you to qualify for additional funding or more favorable terms. 

What Is a Commercial Loan?

Commercial loans are meant for businesses. Like the consumer option, they're available in many forms, from revolving lines of credit to equipment loans to Small Business Administration (SBA) loans. These products provide funding to help business owners grow.

In most cases, commercial lending is approved for a specific purpose, such as buying inventory, purchasing equipment, or starting a business. They come in secured and unsecured forms, and to qualify, lenders will look at the financial health and history of the business. If you're just starting out, they may assess your personal finances and credit history. The amount and terms of the loan will vary depending on your business's performance and needs. 

If you need help obtaining a consumer or commercial loan, get in touch with Chattanooga First Federal Credit Union. This Hamilton County, TN, credit union can assist you with finding terms that suit your unique needs. They have more than 55 years of experience in helping local individuals and businesses obtain funding. Visit their website to learn more or speak with a representative at (423) 267-7621.