Why Didn't I Learn This in School: Life on Loan

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Remember when you could just borrow a dollar for a candy bar?

These days loans are more complicated. But if you understand how they work, your experience can still be just as sweet.

To get started, you need to figure out what kind of loan you want. Personal loans are for any kind of personal expense, which includes paying off debt. Mortgages are for your new house, auto loans, small business loans -- or to launch your new vegan donut shop.

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Another building block of loans that's crucial to understand is interest. Interest is the money that the lender charges for the money you borrow.

In a fixed rate loan, the interest stays the same while you pay it back, but a variable rate loan can change over time. For student loans, you don't need collateral, and the interest rate is low. For federal student loans you even get a fixed interest rate, and you don't have to start paying them back until after you've graduated.

See the most valuable banks in America:

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The 10 most valuable banks in America
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The 10 most valuable banks in America

1. JPMorganChase

Current worth: $2.47 Trillion  

Photo credit: Reuters

2. Bank of America

Current worth: $2.19 Trillion 

Photo credit: AP 

3. Wells Fargo

Current worth: $1.89 Trillion 

Photo credit: AP 

4. Citigroup

Current worth: $1.82 Trillion 

Photo credit: AP 

5. U.S. Bancorp 

Current worth: $438.5 Billion 

Photo credit: Reuters 

6. PNC Financial 

Current worth: $361.3 Billion 

Photo credit: Reuters 

7. Capital One

Current worth: $339.1 Billion 

Photo credit: Getty

8. BB&T 

Current worth: $221.9 Billion 

Photo credit: Getty

9. SunTrust Banks

Current worth: $199.1 Billion 

Photo credit: AP 

10. Fifth Third Bancorp

Current worth: $143.6 Billion 

Photo credit: AP 

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If you have too many monthly payments, a consolidated loan can take them all and put them under one loan. But, be careful -- Doing this can have you owing more, so always check the terms before you apply.

Next, understand what type of loan you need. A secured loan means you put down some collateral. With an unsecured loan, there is no collateral, so the interest is higher -- and some will even need an additional co-signer.

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Now it's time to apply. There are quite a few important factors involved, so have all this info on hand to up your chances of getting approved.

Lastly, beware of payment penalties. Some agreements don't let you pay off your loan before it's due, as they get less interest.

So go get that loan! As you navigate new waters, it's just a matter of time before you're captain of your own ship.

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