You are here: Home / Debt / What Type of Personal Loan Would Suit Me?

What Type of Personal Loan Would Suit Me?

There comes a time for many of us when finances are tight. Often cutting back a little or being savvier with our money is enough to get us back on track. However, sometimes there is just no way to make the money we have coming in stretch to cover our out-goings. If this is the case then it could be time to seek out a loan. What you need to bear in mind is that taking out a loan is a big decision and something that you should take seriously. When you look up your loan options you’ll find a range of choices. What you need to do is read up on these and make sure you make the right choice.

Screen Shot 2014-11-18 at 12.37.16

Wikimedia

Pay Day Loan

Pay day loans are designed to be short-term solutions and should not be used for anything that you need more than a couple of weeks to pay back. The amount you can borrow varies but the idea is that you pay it back on your next pay day. The amount can be costly but as you usually only borrow smaller amounts this doesn’t usually matter. The most important thing to remember is that the fees for unpaid loans with this type of loan are hefty. Never borrow more than you will be able to pay back on the date you sent with the lender.

Unsecured Personal Loan

This type of loan is great for longer-term repayments and for borrowing larger amounts of money. Unsecured loans are usually given to people with decent credit ratings, as they have a good track record of making payments when promised. The amount you can borrow depends on the lender and you’ll also need to decide with them how long you are going to borrow  the amount
for. They’ll often ask you why you need the money and repayments are usually made monthly.

Secured Personal Loan

A secured personal loan is another option for people who need to borrow money over a longer term. These are usually offered to people with less than perfect credit ratings. The amount that is borrowed is usually secured against something  – a house or a car for example. It is important to keep up repayments of this because if you don’t then your property could be taken away. Much like unsecured loans you’ll need to arrange with the lender how much you are going to borrow and when you’ll pay it back.

Making The Decision

Taking out a loan is a big financial decision. It is important that you read up on websites like Money3 and other financial websites for help and advice. Make sure you have read the terms of the loan you are taking out. Before you sign any contract make sure that you know exactly what you are getting into.

Remember you are also committing to pay back the loan when agreed, so only take out a loan if you can afford to pay it back.

About Ellis Crawford

Comments are closed.