Government loans are loans that the government of a country makes to the citizens of that country for meeting their needs and for their upliftment or betterment. This helps in narrowing the wide gap between rich and poor and streamlines the country’s economy. Government loans are almost for all kinds of purposes like student loan, house purchase loan, business set up loan, small business SBA loan, car purchase, heavy machinery etc.
Government loans are broadly divided into two categories: VA and FHA. The former ie VA loans are quite advantageous as they do not require a down payment and mortgage insurance. They are under the sponsorship of the Veterans Administration from which the name is derived. These loans are provided at fixed rates that cannot be changed. VA loans are only for qualified veterans and not the rest of the public.
FHA loans can be given to any qualified person who wants it. They require a bit of extensive paperwork and are usually chosen by those looking to buy multi-family homes because they have a seemingly low down payment.
If we make a comparative analysis of the loans provided by the private companies and banks and those provided by the government, the latter outweighs the former in many respects. The only motive behind a private bank or company lending money to people is to make a profit or accumulate more wealth. But the government works for the noble cause of the welfare of its citizens. It does not pursue any private goal, but the whole idea is to strengthen the country’s economy.
It’s not that the government, unlike all other private lending companies, doesn’t have criteria or a set of parameters to judge who all qualify for the loan they’re applying for. But this criterion is often mild. The government sometimes gives loans to even those who don’t have the potential to pay it back. Not only this, but in the event of a natural catastrophe or catastrophe, if those who took the loan become inefficient to pay it back, the government simply excuse the amount borrowed.
Compared to private banks and companies, the interest rate at which government bonds are offered is considerably low. In addition, the government can make large amounts of loans over a considerable period of time. As a result, you have relatively small monthly costs and more security. Private companies usually charge high interest rates from their customers to make large profits. They lure the customers by promising that the loan amount will be delivered right at their doorstep and with the least amount of documentation. The government bonds generally require more documents, but that should not undermine their benefits. While going for a government loan, the best thing you can do to avoid running around is to opt for a well-qualified agent. These agents do all the official work (such as collecting, checking and filing documents) by moving from one office to another. The best thing is that they are not too expensive and provide you with sufficient knowledge, guidance and service at your leisure.
So make a wise choice, take out loans through the government. They can be a huge help as government is always meant for the good of the public.