Life happens and whatever the reason may be, you need a loan.
Do you know your options? Did you know you even had options? Do you know which loan is right for your situation? If you have answered no to any or all of the following questions, this blog is for you.
Keep reading to learn more about the different types of loans so you can make an informed choice on what the best option for you is.
There are 3 main types of loans: Personal Loans, Payday Loans, and Bad Credit Loans. Let’s break them down
Personal loans are an all-encompassing term for a loan that is borne out of personal need. Personal loan money is delivered in one fixed payment and is paid back over an agreed upon payment term with your lender. The money is paid back in installments, meaning a fixed amount is charged on scheduled dates until the loan is paid off. This money can be used to purchase vehicles, fix your house, and consolidate debts with high-interest rates, amongst other things. The payment term, payment schedule, and interest rates are something to be negotiated with the lender. Note that sometimes these loans are referred to as ‘consumer loans.’
Note also that there are two types of personal loans, secured and unsecured loans. Secured loans require you to deem something as collateral with your lender. Collateral refers to an item/asset that you hold that belongs to you that can be taken by the lender if you fail to pay your loan. Unsecured loans do not require collateral. However, punishment for non-payment could include legal action and impact your credit. It is important to only borrow what you can afford to pay back. Sometimes your lender will allow you to borrow more than you can afford, but you must resist this temptation!
A PayDay loan is a more short term fix to temporary money issues. PayDay loans are like a cash advance to help you make it until your next paycheck. The common practice in the PayDay loan industry is to take a portion of your next paycheck goes to the lender as payment for the cash advance they gave you. These loans often have high-interest rates and/or take large chunks of your next paycheck but are great if you are employed but in a pinch.
Bad Credit Loans
Whether your financial journey has had some missteps or you haven’t had the chance to build your credit, a bad credit loan may be the right option for you. Bad credit loans allow for people who would be denied elsewhere for a loan to get one. Bad credit loans are a form of personal loan that allows borrowers to receive a lump sum of money and pay it back over a fixed term. Similar to personal loans, their payment terms, payment schedules, and interest rates are something to be negotiated with the lender. Again, please do not borrow more than you can pay back and don’t let lenders convince you otherwise.
To learn more about loans, lenders, and what the best option is for your situation contact Loanspot at https://loanspot.ca/