Banks and credit unions are two of the most common sources of consumer and business loans. These loans may be secured or unsecured, and may take the form of home mortgages, home equity loans, installment loans (loans repaid in monthly installments), auto loans, student loans, and credit cards.
In Kentucky, banks and credit unions are regulated entities that provide various loan products to consumers and businesses. These loans can be either secured, with collateral such as property or a vehicle, or unsecured, without collateral. Home mortgages and home equity loans are secured by the borrower's property. Installment loans, which are repaid over time with set monthly payments, can be secured or unsecured depending on the terms. Auto loans are typically secured by the vehicle being purchased. Student loans can be federal or private, with federal loans offering more protections and typically lower interest rates. Credit cards represent a form of unsecured revolving credit, where the borrower has a limit they can spend and must make monthly payments. Kentucky state statutes and federal laws, including the Truth in Lending Act (TILA) and the Equal Credit Opportunity Act (ECOA), provide regulations to ensure fair lending practices and protect consumers from predatory lending.