If you ever need a little extra cash, it can be quite easy to take out a loan to cover your needs. As long as you have a decent credit score, you will be able to withdraw money because the credit score is as good as proof that you will pay the money back when you can.
There are several types of loans that you can take out, depending on the exact amount you need to access and your ability to repay that money.
You have probably already heard of most types of loans. Mortgages, student loans, small business loans, auto loans, etc. Most of these loans are pretty clear in terms of the purpose of the money raised, and they tend to fit into the usual ways of how you get the loan and how you pay it back.
But, loans do not differ only in terms of what they are used for. They also differ in how they can be obtained, the amount of interest they charge, and their repayment plan.
We will cover several types of loans in this article. (We’re not going to go through absolutely all types for the sake of brevity.) Feel free to scroll down to any section that particularly interests you.
Personal loans are primarily used to pay for expensive items that you might need to purchase but would not normally have in your checking account.
Examples of such items may include furniture or major appliances.
If you think about take out a personal loan, you will generally need a credit score of at least 610 points, and sometimes up to 640 points, although this may vary depending on the provider.
The repayment is usually monthly, and it is generally classified as an unsecured loan. You are usually offered several years to repay the loan.
Interest will be charged on any personal loan you take out, but this can vary depending on the provider and the quality of your credit score. The interest rates on unsecured personal loans generally range between 5% and 36%.
Simply put, a credit card loan is basically all the money you owe on your credit card.
A credit card can be used for the same kinds of things as a personal loan if you want, but people tend to use it for smaller items which tend to be cheaper. And they tend to use it over and over again, accumulating more and more debt.
As with any other type of loan, interest may be charged. Getting and using a credit card is a great way to start building your credit score if you don’t have a particularly good credit score yet.
The main difference between credit card loans and unsecured personal loans is that while a personal loan is supposed to be paid off over a fixed period of time, credit card debt can be owed throughout your life. life.
A credit card loan typically requires a minimum monthly repayment, which can be as low as $ 5. And as long as you keep making your minimum payments, you will usually be offered a higher level of credit because you prove that you will pay back the money.
A secured loan is a whole different type of loan. With a secured loan, you pledge certain assets as collateral for the loan. This way, if you don’t repay the loan, the lender can sell the asset that you offered as collateral to repay the loan.
Examples of secured loans are mortgages, auto loans, and home equity loans. Secured loans come in handy when you need a loan for a very large amount of money.
As you can see, there is a wide variety of loans to choose from, and one for every set of needs. Choose what works best for you.