Life is often hard to plan for, with many instances where you and your finances are thrown for a loop. There are many reasons to take out a loan, and when you have unforeseen circumstances arise, you might not always have enough money set aside to cover all your expenses. Here are 7 types of loans that can be considered for a wide variety of situations that you might find yourself in:
Small loans are typically considered and used when you don’t need a large sum of money, but instead smaller quantities These types of loans, according to https://moneytrumpet.co.uk/small-loans/, can be important and come in handy with day-to-day issues such as helping with expenses due to emergencies like hospital visits or necessary home and auto repairs. .These loans are typically made on shorter terms, and are not recommended to be taken out or used regularly.
Bad Credit Loans
Bad Credit Loans are loans that you will or can apply for if you find yourself in a position where you have been rejected or declined due to poor credit score or inability and difficulty paying back prior loans. If you have had these issues, most mainstream institutions may deny your application, causing you to search for lenders that are open to working with your situation. Being rejected by one lender does not mean you will be rejected by all lenders, as some institutions have higher demands and criteria in order to borrow from them.
Short Term Loans
A short term loan is a loan whose timeframe hovers around one month, but can extend for up to 12 months. Some differences of short term loans tend to have higher interest rates than longer termed options, you may have to give the lender access to a debit card to ensure payments can be met timely and for the agreed upon amount, and the loan amounts tend to be smaller. Additionally, these types of loans are easier to attain than traditional bank loans and can be options for those that are denied from larger banks and lenders.
No Guarantor Loans
Many loans will require a guarantor to sign off on the amount you are borrowing. These guarantors are people that trust you and understand that if you cannot repay a loan, they are willing to take the legal responsibility for that loan payment, usually coming in the form of a family member or close friend. Having someone that trusts you with large amounts of money can be difficult to find. For those that cannot find an acting guarantor, no guarantor loans are an option. It is important to note that these are usually high-interest loans that come in lower amounts. In this case, the lender is taking on a much larger risk, so they increase their interest rates to cover said risk.
Payday loans are one of the most used, and well known types of small loans. These are usually loans you would take out when the need for cash is immediate. These loans are usually for smaller amounts and are meant to hold you and any expenses over until your next paycheck. Usually, you will have to make your payments on the loan in full and within two weeks, or a date near your payday, hence the name. Alternatively, some lenders offer options to payday loans to be paid in instalments, especially with higher loan amounts. This will increase the time it takes to pay off a loan, but a scheduled set of payments can be what you need to comfortably need your financial responsibilities without having to seek further assistance.
A secured loan usually involves some sort of asset, your home or vehicle, for example, to be used as a collateral or a guarantee that you will pay back the lender, otherwise they can take that asset away from you. These loans can typically range in the amount you borrow, but the collateral provided will have to match or exceed the loan value, potentially increasing the risk on the borrowers part but lessening the risk on the lenders part.
Alternatively, unsecured loans don’t require a collateral as an insurance policy or guarantee for your payment. Instead, the lender can take you to court if you do not meet the requirements for your payment. The interest rates on unsecured personal loans can often be much greater than interest rates provided by unsecured personal loans offered by banks or credit unions.
The world is an unforgiving place. It is important to be able to have financial flexibility in all scenarios, as there are always last minute changes that you might have to adjust for. When you can’t plan for everything, sometimes a loan is what you need for financial stability. Understand what different loans offer to find the right one that suits your needs.