If you are applying for a loan, then you should know about the different types of loan and which options suits your situation. The different types of loan include but are not limited to secured and unsecured personal loans, payday and payday alternative loans, title loans, home equity loans, pawn shop loans and credit card cash advances.
Secured and unsecured loans are broad terms that include many loan options. A secured loan is when you offer your any valuable as a collateral to the lender in exchange for the loan. So, if you fail to pay back the money along with the interest, your collateral goes into the possession of the lender.
While an unsecured loan means that you do not secure it with any asset but just the promise of repayment at a certain time. You can use a co-signer for an unsecured loan if you have a guarantor who would sign with you on the loan agreement that they would pay back your debt if you fail to comply by the agreement. Student loan comes under unsecured loan as students mostly do not have anything valuable to offer as the collateral. Auto loan, that is a car loan, could be an unsecured or a secured loan. If it is a secured loan, the collateral could be the same car for which the loan is taken or it could be the house or another car of the borrower.
When you are in need of applying for a personal loan, you can get online loans from online lenders, borrow money from credit unions, banks or family and friends.
These include non-bank lenders and peer to peer (P2P) lenders. Online loans are mostly comfortable and easy and they are also low cost. These lenders willingly lend you money even if your credit history is not that perfect. They use fixed rates and you don’t have to pay the penalty if you repay earlier than scheduled. Online loan is a very good option as you are mostly able to repay within 3 to 5 years. You should decide on the online lender by comparing their application fees and offers and making sure that you would have enough money left for your own needs after paying the charges,
Credit unions are a superb option for personal loan. They are more inclines to approve your loan application as compared to national banks. A perfect credit score is not necessary to be approved but you need to be earning something to qualify for the loan. They may present you with the short-term payday alternative loans (PALs).
Banks can give you small personal loans as well as loans of several thousand dollars or more. It may be suitable and inexpensive if you have a good credit history and a constant salary. If you want to borrow small amount of money, banks may provide you with a credit card. You just need to make sure that you pay-off the balance monthly.
Friends and family:
You can also borrow from someone you know or who belong to your family, if they are willing to lend you money. But you should both sign a written agreement that should have all the details of the process. But you need to keep in mind that money can destroy relationships.