Understanding the Types of Personal Loans

Can you believe that a single visit to the emergency room could cost you as much as $1,624?

From a health emergency to an automotive one, anything can happen at any time. If you live from paycheck to paycheck or have only a minimal amount of savings, you might be wondering what you can do if something bad like that happens. A promising possibility involves getting one or more personal loans.

Are you wondering what your options are for personal loans? Keep reading to learn all about the different types of personal loans and which ones are the best.

Unsecured Loan

If you want fast cash, then your best option is an unsecured loan. Put in the simplest terms possible, the name “unsecured loans” refers to the fact that they don’t require you to put collateral on the line. Instead, the loan provider will determine their offer based on your credit score.

This is why it’s so important to maintain a credit score that’s as high as possible. By preparing now, you’ll receive much better loan terms in case you ever need quick cash. The last thing you’d want is to get stuck with high annual percentage rates because your credit score ended up being too low.

Worst case scenario, you could opt for a personal loan using a strategy that doesn’t even take your history into account. In fact, you could have no credit history at all and still have a chance at the loan you need.

The one other possible downside to an unsecured loan is that there could be a limit on the amount of cash you can get from the loan provider. However, the exact limit will vary based on a number of factors, such as who your specific loan provider is, your financial history, and more.

Aside from a couple of downsides, you’ll be glad to know that another benefit involves your payment plan. Unsecured loans are often much more straightforward about what you’ll owe and when you’ll have it fully paid off. That way, you don’t have to toss and turn at night wondering when the payments will end.

Secured Loan

Are you still wondering what kinds of emergency loans are available to you? If an unsecured loan doesn’t meet your needs, then perhaps a secured loan would be better. However, unlike an unsecured loan, this type involves putting collateral on the line.

The exact collateral will depend on how hefty of a loan you’re after and who your provider is, among other factors. It could be something as simple as a gold watch or as big of an asset as your entire house. Sometimes you even have the option of giving the loan provider access to your savings account.

If you end up missing multiple payments on the loan, it’s within the right of the loan provider to seize the collateral. The fear of losing their valuable assets is one reason why people avoid opting for a secured loan. However, if you’re confident about your ability to pay it off, then you should feel free to choose this financial route.

One of the greatest benefits of a secured loan is that you can get wonderful rates. The catch is that the rates will depend on the value of the collateral you offer. Simply having any collateral at all is a good way to lower your rates at least by a few points.

Keep in mind that some lenders are notorious for not lowering their rates despite the collateral involved. People who offer payday loans, for instance, are known for having rates that are way too high. Car title loan providers are also something you should avoid at all costs.

Wedding and Vacation Loans

They say that a wedding is one of the greatest milestones in life. Instead of putting your wedding off for years and years as you struggle to save up money, you can opt for borrowing money through a wedding loan and have your big day as soon as you want it. There’s no getting around the fact that weddings are expensive, especially if you want one that will do your love justice.

From a venue and catering to the dress and the rings, you can pay for most if not all of it with a wedding loan. Another type of personal loan that’s similar to a wedding one is known as a vacation loan.

America is famous for its strict work ethic. However, all work and no play can end up causing people to become way too stressed out. Some of the best vacations are often the most expensive ones, such as a trip to Hawaii or a getaway to the Florida Keys.

A vacation loan can help you make your dream of total relaxation into a full-fledged reality.

Credit Builder Loans

Sometimes it’s hard to build up your credit after it’s been so low for so long. Instead of struggling with this on your own, you can make things much easier with a credit builder loan.

This type of personal loan can either be secured or unsecured. With each payment you make, your credit will improve. This option is also great for people who have no credit yet but want to build it up as high as possible.

Just be sure you stick to finding a lender that’s reputable and reliable. 

Are You Ready to Choose Between Different Types of Personal Loans?

Now that you’ve learned all about the different types of personal loans, you can have a better idea of what to do during a challenging situation. You can rest easy knowing that there are some safety nets for you to fall on.

FastLoanDirect is your number one provider of personal loans. We value our clients and offer competitive rates. Once you’re approved, we can give you a lump sum the next business day.

You can get started by clicking here. Feel free to look at our FAQ section or contact us with other questions you may have.