Have you had an unexpected expense come up? There’s no need to panic.
With 25% of Americans having no emergency savings at all, it’s no surprise that personal loans are pretty popular these days. A personal loan is a type of loan that any individual can get and that can be used for an emergency or for a variety of specific purposes.
If you need some extra cash, it’s important to know what your personal loan options are. Here are the main types of personal loans that you should know about.
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A secured personal loan is one of the main types of personal loans that you can get from a lender or banking establishment.
With these loans, it will be necessary for the borrower to provide collateral or secure the loan in some way. These loans may require savings account information or a CD. In many cases, collateral will be needed in the form of an expensive item such as a boat, an RV, or a vehicle.
With secured personal loans, it’s necessary to borrow responsibly. If you miss payments, your collateral may get taken by the lender.
Unlike secured loans, unsecured personal loans don’t require collateral. Instead, your ability to borrow will usually be tied to your credit score and your financial standing. The interest rate that you’ll need to pay will vary based on the credit score you have.
Unsecured personal loans can be a good choice when compared to secured loans, especially for people with good credit. This is because they can get great rates without the need to risk their personal property as collateral.
Credit builder loans are also common and can be used to help build an individual’s credit score.
These loans can be either secured or unsecured. Usually, these loans are relatively small and borrowers will be able to pay them off after only several months.
By taking out one of these loans, you can build your credit score for the first time or rebuild it. A variety of lenders offer these types of loans so the terms and the collateral needed may vary by quite a bit.
Debt consolidation loans are used to consolidate debt and make it easier to manage. This kind of loan is often used to pay off multiple credit card balances, for example, and can allow a borrower to save on interest and reduce their overall financial burden.
Because debt consolidation loans usually have lower interest rates than credit cards do, they can help a borrower to pay less overall when paying off debt. The borrower’s debt will turn from several payments into one and this can help with managing it as well.
Usually, these loans will be unsecured, so there will be no worry about collateral getting taken from you.
A personal line of credit isn’t quite like a loan but isn’t quite like a credit card either.
With a personal line of credit, a borrower won’t get a lump sum of cash like a typical personal loan. Instead, they’ll get access to a revolving line of credit that functions similarly to a credit card. You can use the credit line as needed and will pay interest on any money that you borrow.
Using a personal line of credit may be a good option if you need access to funds and will need to continue using more on a regular basis.
Getting a title loan is another popular option for getting access to cash and can be much faster than other types of personal loans.
With a title loan, you’ll be using your vehicle as collateral and there will be little or no credit score requirements. You can get a title loan at a title loan shop or a pawnshop and can often get access to cash on the same day. If you’re looking for a title loan in Lawrenceville, GA, you may want to check out georgiatitleloans.com now.
Make sure that you’re careful with title loans, however. Your car can get taken from you if you fail to pay your loan. Additionally, loan term lengths are short and there may be high-interest rates and fees that you’ll need to watch out for.
Payday loans are another type of loan that can be risky if you’re not skilled at managing finances, so be sure to be careful if you decide to get one.
Like title loans, you can get payday loans without a credit check or with a very low credit score. A payday loan is a loan that is unsecured and will need to be repaid on the borrower’s upcoming payday. These loans will usually only be several hundred dollars max.
These loans are also short-term and have high-interest rates so they can lead to a cycle of debt. If you get a payday loan, you need to be absolutely sure that you can pay it back in a timely manner. Otherwise, you may suffer the consequences.
If you have a credit card, then a cash advance may be one option to consider if you need a lump sum of money. You can easily get a cash advance from your credit card by visiting an ATM or a bank and can borrow from your credit line in the form of cash.
A cash advance can be a good option if you need cash fast, but it has its drawbacks. There will usually be extra fees when you get a cash advance. A cash advance will also have higher interest rates than your card’s credit line.
There are many types of personal loans that exist, so you have plenty of options to choose from if you need extra cash. However, be sure that you consider the pros and cons of each carefully before making your choice.
Searching for more tips for improving your personal finances? Read through our blog now to find more useful information.
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