Are you facing a sudden financial emergency and looking for a personal loan to cover your urgent financial needs? If this is your first time applying for a loan, you ought to know your options and the different types of personal loans. In other words, you ought to know which loan is the right pick according to your financial emergency and income.
If you accidentally choose the wrong loan, you can get in serious financial trouble. For instance, you might have to pay a higher interest rate and longer installments. If you are responsible while dealing with money every day, you can immensely benefit from credit cards. However, in the case of bad credit, you can still avail of personal loans and get fast cash from the following options:
Installment loans work as direct opposites to revolving credit. This loan type grants the borrower a certain amount that they (borrower) can pay back later in fixed installments. Installment loans provide a clear picture of the borrower when the end date is and the interest rate.
However, when it comes to interest rates, there are usually two types of interest rates: the variable interest rate and the fixed interest rate. If an installment loan has a fixed interest rate, the borrower must pay the same installment amount every month. The different installment loans include mortgage, student loan, and Kiwi car loans.
A payday loan is exactly what it sounds like: it is fast cash that allows the borrower(s) to deal with their urgent financial needs, such as a sudden medical bill or car repair. Usually, the payday loans are paid back when the borrower gets their next paycheck. A payday loan can reach up to $500, but, mostly, it depends on the borrower’s monthly income and credit score. Usually, the return period for the loan ranges somewhere between two and four weeks.
A personal loan is another widely-sought type of loan. It is also a type of installment loan that allows people to borrow a certain amount of money for various reasons. For instance, a personal loan might be used to consolidate debt, plan your big wedding day, or even invest in home renovations. Usually, payday loans are offered by a bank or an online lender. If you opt for an online lender, you can benefit from an easy and quick application process. After processing the application, the potential borrower can receive the amount on the same day.
Secured vs. Unsecured Loan
Typically, there are two types of loans: secured and unsecured loans. The secured loans require collateral as a security. The collateral is usually something very valuable, such as a car, house, or even jewelry. The secured loans often have a lower interest rate and are easy to get. People with a bad credit score can immensely benefit from a secured loan. On the other hand, an unsecured loan doesn’t require collateral and has a higher interest rate.