Choosing Between Different Types of Loans

When faced with debt, it’s one thing to admit that you have to take out a loan to make ends meet, but it’s another thing to know which type of loan is best for you and your financial situation. not everyone will have the same monetary needs, so it is helpful to know which loans are–generally-best for different types of situations. The following guidelines should help you in choosing the right type of loan to get out of debt and move on toward financial stability.

Title Loans

About the loan: Title loans and title pawns are the quickest way to get money in your pocket. One of the only requirements needed to take out this type of loan is full ownership of your car. After filling out an application, your car is assessed for its value which determines the amount you are able to loan. Once the terms are agreed upon, your money is given to you with the expectation that it will be paid back in a timely manner.

Is this the loan for you? This type of loan is ideal for the person who has too much debt to handle or has bad credit that won’t be approved for any other type of loan.  The process to take out a loan is easy and simple and is likely the same anywhere you try to find a lender, from TitleMax to any other company. Quick cash and short repayment terms are what you are looking at with a title loan.

Personal Loans

About the loan: Personal loans are convenient in that they can be used for just about any purpose you see fit, and are backed by the bank. The size of the loan can vary from several hundred dollars to several thousand, and doesn’t involve a middleman lender. They tend to have a higher interest rate than other loans, but they can be paid back over several years of time.

Is this the loan for you? This type of loan is the best fit for someone looking to pay off a bill or who is looking to finance a project. If you are in need of a smaller amount of money, this is a smart option. Because they have a higher interest rate, it is not something you want to take out if you cannot pay it back within a couple of years.

Credit Car

About credit: Although not a loan, credit cards give you access to money with an understanding that it will be paid back at a later date. They can be helpful if you have any big purchases or projects and are typically approved fairly easily. In many cases, you can apply for credit at the time of purchase and are approved quickly. The risk, however, is that a high credit limit lends itself to more debt.

Are credit cards for you? Credit cards, though helpful, come with a higher risk of adding debt to your life. They are helpful if you have other balances that you want to transfer in order to consolidate your bills and are a great way to finance large purchases. Credit cards are quick and easy to apply for, but they ultimately have high-interest rates.

There are many other types of loans out there that you can compare, like payday loans or installment loans. The important thing to do before borrowing any money is to know and understand the terms of the loan so that you know what to expect down the road. It is a big decision and costly, so know as much as possible beforehand in order to make the best decision for your situation.

Image Source: findunifi.com