When it comes to financial difficulties or sometimes we just want to improve our home, all we can think of is where to get money. One of the best solutions is to apply for a personal loan. A personal loan is an installment type of loan, meaning a consumer will borrow money from a creditor and agree to pay it back with monthly interest or depend on the loan terms.
When talking about where to apply for personal loans, the first thing that comes to mind would always be the banks. But they are not the only institution that offers personal loans. There are also private companies and sole proprietors that offer personal loans for people who are entitled to one. With that said, here the types of personal loans you can apply for.
Unsecured Loans
Unsecured loans are one of the easiest personal loans you can apply for. If you are someone with a very good credit rating (670 or higher), then Unsecured loans are perfect for you. This type of personal loan doesn’t have collateral required from the borrower. With that said, the lender would usually charge a higher interest rate to offset the risk of not having collateral.
Unsecured loans also include credit cards and student loans; lenders would usually let the consumer borrow from $1,000 to $5,000 and charge an interest rate ranging from 5% to 36%. However, it would still depend on your credit history because it is the basis of your creditworthiness. To learn more about personal loans you can apply for, you can visit Crediful.
Secured Loans
Secured loans are another type of personal loan, but this time it is backed with collateral. Meaning, when you borrow money, you need to have an asset that will complement the amount you borrow. In this type of personal loan, consumers are not required to have a good credit history, but you need to pay the amount you owed as a gesture of goodwill.
Since this loan is backed with collateral, lenders would typically impose a lower interest rate. Lenders would not worry too much if they will not be paid because there is collateral in line. Just in case you won’t be able to pay your debts or stop paying your debts, the lender can repossess your asset, and the proceeds will be used as payment to the amount owed.
Debt Consolidation Loans
If you have existing loans and want to unify them all, the debt consolidation loan is your best option. This type of personal loan allows you to consolidate all your existing loans into a single loan. This loan’s nature helps you avoid higher interest rates with the other existing loans because, in this type of loan, you will enjoy a more favorable payment term.
If you have relatives who are still a student and incapable of paying their tuition fees, it’s a good idea to recommend them to apply for a debt consolidation loan because this loan is one of the best tools in dealing with student loan debts. Not only that, but this loan is also a good solution in settling credit card debts and other debts.
Cosigned Loans
If you don’t want to put your asset as collateral in a loan or if you have a bad credit history, it’s a good idea to apply for a cosigned loan. A cosigned loan requires the borrower to include a co-signer that ensures the lender that if the borrower can’t pay, the lender can collect the debt from the co-signer. But of course, the co-signer must also have a good credit history.
Another advantage of having a co-signer is that lenders may give you more favorable loan terms and help you borrow for an amount more than you qualify for. With that said, you now have an idea of what personal loan you can apply for even when you have a bad credit history. Just ensure to pay the debt so you and the co-signer won’t have problems in the future.
Personal Line of Credit
A personal line of credit is a revolving form of credit, the same as a credit card. With that said, the consumer will be granted a loan which they can borrow for an amount they need; but will only be charged with interest if there are outstanding balances. For a consumer to qualify for a line of credit, they must have a good credit rating and good credit history.
One of the reasons why most people apply for a line of credit is its flexibility when you need money. In this type of personal loan, the borrower can easily access and take advantage of their loan availability as long as it is within the draw period. Not only that, once the borrower paid the debt and it’s still within the timeframe of the original debt, they can borrow it again.
Takeaway
Whether you have a bad credit history or not, it would still be best to know the types of personal loans you can apply for. With that said, take time to read this article, and this may help you in the future.
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