Living paycheck to paycheck is akin to living on the edge of financial uncertainty. If your paycheck delays or you lose your job, you could fall into a financial problem. You could be late on bills, especially if you’ve got no emergency fund.
What if the worst has happened and you’re in a financial emergency?
Taking out a loan is one of your best options. What’s more, there are different types of loans for different financial situations. Which is right for you?
Keep reading to learn more about what type of loans are available.
Secured Personal Loan
Let’s say you need money urgently.
The only problem? You don’t have a job, business, or any other verifiable source of income. Without these, most lenders will turn you down when you want a loan.
This is where secured loans come in handy. This type of loan requires you to provide collateral, such as your car or home’s title. Because lenders know they can repossess the collateral and sell it off if you default on the loan, getting approved for the loan isn’t a big challenge.
So, if you own a car or a house and have a clear title, title loans will suit your financial situation.
Unsecured Personal Loans
If you’ve got a steady source of income, you will easily qualify for an unsecured personal loan. But you see, there are several types of unsecured personal loans. Let’s break down the most common.
Most of us have been in this situation; when your paycheck runs out just before another one is due. If you need money to keep you going till the next check hits your account, you could go in for a cash advance.
Your bank, or any other lender offering cash advances, will give you a certain amount of your paycheck as a loan, repayable as soon as the next check hits your account.
Debt Consolidation Loan
Do you already have multiple debts? If yes, you know how challenging it can be to keep up with the various lenders, especially if you’re struggling financially.
When in this situation, it’s best to take out a debt consolidation loan. If your application is approved, you’ll use the funds from the loan to pay off all your other loans. You’ll then have one lender to deal with. What’s more, the interest charged on consolidation loans is usually lower than the weighted average of all the other loans you’re looking to pay off.
Credit cards aren’t a typical loan, but they’re still a form of personal, unsecured debt.
If you’re in a situation where you don’t urgently need money but want to know you can access it whenever you want to, apply for one or two credit cards. As long as your credit score is above average, a credit card company can approve you for a certain limit.
You don’t have to spend the money on your credit card, but if you do, you will need to repay whatever you’ve spent before the end of the billing cycle.
What Type of Loans Are Ideal for You?
The personal lending market is awash with different types of loans for almost every financial situation. Having read this guide, you’re now familiar with the various credit facilities you can go for. Which type of loans will you choose? Your choice!
Need more financial tips? Keep reading our blog!