When you start searching for loans, the first thing you may notice is how many different kind of loans there are. From a secured loan to a business loan, to ways to get instant money, you have many options! So how can you decide which loan is the best for you? This quick guide will help you learn about a few of the most common kinds of loans and hopefully guide you toward which loan is right for your personal situation.
Unsecured Personal Loans
Many personal loans are considered to be “unsecured” which means that you get the loan without having to offer collateral. Since there is no absolute guarantee that a lender will get their money back, an unsecured loan often has slightly higher interest rates. You will be approved for an unsecured loan through a credit check which will be the main deciding factor on the loan. There are many kinds of unsecured loans as well but essentially, if you see the word “unsecured”, it means you can get a loan without having to promise your home or car if you fail to pay the loan back.
Secured Personal Loans
A secured personal loan means you offer collateral to the lender in order to get a hard money loan. A very common example is a car loan. The lender will give you the money you need to purchase the car, but if you do not pay the loan back, the lender will seize the car. Interest rates on secured personal loans are often very low since the lender is assured to get repayment in one form or another- they are willing to give you cash for much less in return.
Quick Cash Loans
If you need fast cash, you may want to consider taking out fast cash loans. Payday loans, same day loans and credit card cash advances are all types of loans that will get you money in a hurry and you will receive the funds in the same day! Sometimes, a quick loan won’t even require a credit check! You can also setup automated payments to stay on top of your finances!
Personal Vs Business
Loans tend to fall into two categories, those for personal use and those for business purposes. Only a legitimate, registered business can apply for a business loan while anyone can apply for a personal loan. Business loans are typically only given out to use for business related purposes. You cannot take out a business loan and then use it to pay your personal rent, for example. If you own a business and need cash for the business, consider a business loan. If you need money for absolutely anything else, then a personal loan is what you need!
Fixed Rate Loans
If you like the idea of having a consistent, reliable monthly loan payment, you want to look for a fixed interest loan. These are easier to budget for and you will never have any surprises when it comes to repayment.
Variable Interest Rate Loans
A variable rate loan will have an interest rate that goes up and down depending on the banks benchmark rate. If interest rates as a whole rise, your bridge loan lenders repayment will rise as well. Variable interest rate loans are good if you are taking out a loan with a quick repayment term as you can take advantage of consistently declining rates.
Consider all your options when you start to look for loans. With so many choices, you are sure to find one that works for you and will get you the cash you need with the terms that you want.