Government loans are those that the government of a country provides to the citizens of that country to meet their needs and for their improvement or betterment. This helps reduce the wide gap between rich and poor and streamlines the country’s economy. Government loans are almost for all types of purposes such as education loans, loans to buy a house, home loans, loans to set up a business, SBA, small business loans, buying a car, heavy machinery, etc.

Government loans are broadly divided into two categories: VA and FHA. The former, that is, VA loans are quite beneficial because they do not require a down payment or mortgage insurance. They are under the sponsorship of the Veterans Administration from which the name is derived. These loans are granted at fixed rates that are not subject to change. VA loans are intended only for qualified veterans and not for the rest of the public.

FHA loans can be made to any qualified person who wants it. They require some extensive paperwork and are most often chosen by those looking to purchase multi-family properties, since they have a seemingly low down payment.

If we do a comparative analysis of the loans granted by private companies and banks and those granted by the government, the latter outperform the former in many aspects. 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 benefit of its citizens. It does not seek to fulfill any private purpose but rather the whole idea is to strengthen the country’s economy.

It is not that the government, unlike any other private company that makes loans, does not have criteria or a set of parameters to adjudicate who is eligible for the loan they request. But this criterion is often light. The government sometimes grants loans even to those who do not have the potential to repay them. Not only this, but in case of any calamity or natural disaster if those who took the loan become inefficient in repaying it, the government simply excuses the loan amount.

Compared to private banks and companies, the interest rate at which government loans are offered is significantly low. Also, the government can provide large amount of loan for a considerable period of time. This allows for relatively small monthly installations and more security. Private companies to earn large profits usually charge high interest rates to their clients. They lure customers by promising instant delivery of the loan amount at their doorstep and with minimal paperwork. Government loans generally require more documents, but that shouldn’t undermine your benefits. While shopping for any government loan, the best thing you can do to avoid running is to opt for a well-qualified agent. These agents do all the official work (such as collecting documents, verifying them, and sending them) by going from one office to another. The best part is that they are not too expensive and give you enough knowledge, guidance and service to your liking.

Therefore, make a prudent decision, take loans through the government. They can be of great help since the government is always aimed at the welfare of the public.