People need loans for all sorts of reasons. Whether you’re trying to get a loan for your next big purchase, for medical expenses, or to pay an existing debt, loaning business is a thriving one, so you will definitely find the type of loan that you need.
Getting a loan can be possible, even if you have a bad credit score, as you will find a couple of options in these cases that can help you improve your credit score. This, of course, will depend on a number of factors like your monthly income and whether or not you make your payments on time. If you want to know more about this, continue reading this guide.
Personal loans, or what is sometimes called signature loans or debt consolidation loans, are close-ended, which means they’re unsecured. However, they’re one of the most flexible loans to apply for. You can apply for a personal loan for multiple reasons. For example, you can pay your credit card debt, medical bills, funeral expenses, vacations, appliance purchases, wedding expenses, and much more. However, some lenders will have their rules on how you spend the loan money, so be sure to check these restrictions first before you apply. According to statistics found on the Experian website, personal loans have an average interest rate of 9.4%, which can change according to your credit score. A personal loan can be good for you if you are in need of instant money or help you manage your debt.
What distinguishes these loans from others on this list is that they can be repaid within 1 year. This duration can also be extended to 2 years, as some lending companies offer extensions on their loans. Because of the short interim in which you’ll have to repay your loan, short term loans can have higher interest rates than long-term loans, though they are better in providing the applicant with instant cash. Whenever your cash flow is interrupted, and you need to make a large purchase that requires cash up front, you might want to consider applying for a short-term loan. This type of loan is one of the riskier options, especially if you have a bad credit score, but it can also be your saving grace in situations in which you need quick funding.
As you probably already know, student loans were created to aid students in paying their tuition expenses and any related fees. While they all might differ in nature, student loans mostly have low-interest rates and borrowers are not required to pay them until a few months after graduation.
The most common type of student loan is federal loans, which offer the lowest interest rate. This makes them more preferable to private student loans to many college students. To qualify for this type of loan, you will need to have a high credit score and an adequate amount of income to fulfill the payments. If not, a co-signer who qualifies for these requirements may apply on your behalf.
As you might have guessed, auto loans are going to help you to purchase a new vehicle. They are convenient as they are designed for that specific purpose; however, the car, in that case, is considered the collateral, so if you default from making the payment, your car might be seized. On the other hand, if you choose an unsecured personal loan to finance your auto payment, there won’t be collateral, to begin with, but you’ll have to pay for a higher interest rate.
With that being said, make sure that you review your financial situation first and page through your credit reports before deciding on which loan to apply for. Each type has its own pros and cons, but some features can work for your particular financial situation. So, check these requirements and benefits before making up your mind.