If you’ve been considering any type of loan, it’s likely that you’ve been reading a lot about the different options that are out there. There’s an absolute boatload of information out there about loans so that you can figure out what makes the most sense in your situation.
But, the problem is, most of us don’t understand the difference between all of the loans that are out there. It can be hard to really decipher what it is that we’re looking at with these loans and how they may be able to assist us in one way or another.
So, of course, it may be a good idea to dig in and see what we can find out about all of these types of loans. Here’s a quick look at some of the most common ones that you may come across.
Unsecured loans are, typically, the loans that you may go and get from a bank or credit union. These loans are lent to people based on their credit worthiness, and not based on any sort of collateral. While these are the most common types of loans, they aren’t always going to be the best choice for those who have poor credit.
Basically, unsecured loans are based on trust – granted, it’s trust that has been proven over the years due to your credit score – but it’s still trust. You typically don’t have to do anything except sign the contract involved, which is how you will commit that you are actually going to go through with paying off your loan accounts.
Thankfully, you can also find unsecured loans that are specially designed for people who usually can’t get a loan due to their credit score. There’s a pretty solid guide to some of the most common unsecured loans for bad credit at https://letmebank.com/unsecured-loans-for-people-with-bad-credit/, which is provided by LetMeBank. There are other guides online that you can follow as well.
Secured loans, however, are a totally different situation that you need to take care of. These are loans that often have some sort of collateral associated with them. But, you don’t need to have a bad credit score in order to access these loans for yourself.
For example, you may get something called a title loan – that is, a loan where you borrow against the value of your car. A home equity loan is another example of a secured loan – you’re borrowing against the value of your home. That collateral often allows you to borrow more than you may have otherwise.
Sometimes, you’ll hear these called “Hard Money Loans” as well. Secured loans inherently have a lot less risk than what is normally associated with loans, which means that lenders aren’t going to hesitate when you ask to increase the loan. But, you always want to be careful with these loans – if you don’t pay them off, the lender can put a lien on your home or your vehicle until you catch up with payments.
While not strictly a “loan” per se, credit cards are another option that you can consider if you want to try and ensure that you are going to be get money when you need it. Credit cards are typically a little more flexible for people with poor credit, but they also come with their own drawbacks.
One of the biggest issues is that not everywhere takes credit cards; if you need to purchase a car, for example, you actually need to have cash for it. Another consideration is that you are going to pay much, much more in terms of interest – most loans are less than 10%; most credit cards end up having 20% or even 30% as a base.
In some cases, you may find that there are some other loans that you may want to consider. Banks and other financial institutions are trying new things all of the time, allowing for them to be flexible and give you what you need, when you need it. Always look into the background of these options and ensure that you’re doing the best that you can to see what’s right for you.
Exploring your loan options will always give you a pretty solid idea of what it is that you want to do and how you want to achieve your goals. When all is said and done, you can be sure to actually work things out and know that you’re getting the right loan for your purposes.