5 Common Types of Personal Loans You Should Know
You need cash from time to time for emergencies though you always do a wishful thinking that you won’t need it. And then you have to choose the route of personal loans. Moreover, if you have a bad credit score, this route too becomes difficult. Also, it’s true that taking a loan is not supposed to be a good solution because you have to pay interest and that way you return more money to the lender than what you get. But there is a brighter side of these facts.
Firstly you should do a little research and check various types of personal loans available. You can even get a 30000 loan no credit check; you just have to look around. Secondly, you should repay loans on time and save yourself from becoming a defaulter. That will reduce your stress. With that, we’ll make you aware of some common types of personal loans and you can choose the best one for you.
1. Secured Personal Loans
Taking a loan against collateral like car or home is a secured loan. Although most personal loans are unsecured, a few credit unions or banks offer personal loans secured by an asset such as saving account or CD (certificate of deposit). Such a CD may have a high fine for early withdrawal. But as you need the cash immediately, you can access that money through a secured loan without paying fees or selling the asset, although you’ll have to pay a monthly interest and perhaps fees too.
2. Unsecured Personal Loans
Since most personal loans are unsecured, lenders charge higher fees and interest than they would for a home or auto loan for example which is secured by your home or car, respectively. The benefit of this loan is that you get a lump sum as the loan and then you have to repay a fixed amount every month.
3. Fixed Rate Loans
Most personal loans come with fixed rates of interest, so, the payment will remain steady.
4. Variable Interest Loans
Here the rate of interest may change over the term of the loan. They often occur with a line of credit.
5. Debt Consolidation Loans
Through a debt consolidation loan, you can include payday, credit cards and other personal loans, medical expenses and utility bills into one loan with only one payment and interest rate.
Although a personal loan offers you easy cash for your emergency needs, it’s a serious financial decision and comes with a sizeable interest rate. You can meet your financial needs with it but after that you’ll have to pay it back with interest. So, make sure you know all options available.