You’re short on your bills this month. You’ve got to pay your rent, so you’re thinking that the best course of action would be to take out a personal loan. As much as you hate the idea of spending several years of your life paying it back, you dislike the idea of being kicked out of your home even more.
The question is, what are the different types of personal loans available to you? Do all of them come with the same ridiculous interest rates and fees that you’ve heard so much about? Check out this guide to find out.
Unsecured Loans
Nine times out of ten, if you borrow money from the bank, it’s going to be unsecured personal loans. This type of loan allows you to take out money without putting any of your personal belongings up for collateral.
It’s one of the riskiest types of loans for the bank, so you’ll need a good credit score and a steady flow of income to qualify. Once you’re approved for it, however, you can spend the money on whatever you want. The flexible payment schedule will make money management simple.
Secured Loans
Secured loans are the exact opposite of unsecured ones. If you want to qualify, the bank is going to need collateral of some kind. This way, if you default on the loan, they have something they can take instead.
Since the bank is going to get their money regardless of whether you make payments or not, these loans are easier to get. You won’t need an outstanding credit score to apply. The interest rate isn’t that bad either.
Unfortunately, these loans can be hard to find in the financial industry. Not all banks offer them.
Payday Loans
When you look up title pawn near me and get a title loan, the money you get is most likely going to be a payday loan. These are short-term loans of about 500 dollars that you can use for personal finances.
You won’t have to do a credit check, but the loan terms only extend out for about four weeks. If you don’t pay the bank back in full by then, you’ll be in trouble.
Most people end up having to take out a second loan to pay back the first. It puts them down a rabbit hole of debt that’s hard to get out of.
Cosigned Loans
Let’s say that you want to take out a loan, but you don’t have the credit score to do so. Somebody you know that has a perfect score might be willing to help you out by becoming a co-signer.
Essentially, the cosigner agrees to pay off the loan in the event that you can’t. As long as you’re responsible, this isn’t a bad option to look at.
Your Guide to the Different Types of Personal Loans
As you can see, there are tons of different types of personal loans that you can take out to tackle your debt. They all come with their own set of pros and cons.
We hope that you’re able to use this guide to weigh your options and choose the best loan for your needs. For more tips that involve cars and auto loans, feel free to explore the rest of our blog.