If you’re interested in taking out a loan, you luckily have a lot of options available to you. If you find yourself in a pickle, then you’ll want to potentially consider taking out a personal loan. But also keep in mind that it might not be the best idea to take out a personal loan as there are many people who are in massive amounts of debt due to taking out a personal loan. It may seem like a quick fix to getting rid of accrued debt, but the issue with personal loans is that a lot of people take them out to consolidate their debt into one easy place so that they can make payments only on their loan versus making payments on multiple credit cards. The issue here is that many people don’t learn from their bad spending habits and instead continue to wrack up debt and also then have to pay off their personal loan on top of other additional debt.
If you think that you’ll be able to handle taking on a personal loan and can pay it off easily and consistently, then here are the different options available to you.
- Unsecured loans: These types of loans are paid off over a period of time through monthly payments. When you have a good credit score, it’s a bit easier to get approved for this type of personal loan than some of the other options available out there. The length of time to pay off the loan ranges typically from one year to six years.
- Secured loans: With these types of loans, it’s a loan that is backed by a type of collateral, like a car, savings account, home, or other asset. This means that if you’re unable to pay off the loan and default on a payment that the lender can then take the asset that you used as collateral and seize that item from you as a form of payment. They have less of a risk compared to other personal loans for the lender, and it also typically has a lower cost.
- Cosigned loans: This type of loan can be secured or unsecured and there is more than one party that requires repayment. This is a great option for those who have no or low credit because they can ask someone else with a higher credit score to cosign on the loan with them so they’re able to get approved. For the cosigner, the loan will show up on their credit score and any missed or late payments will negatively affect their score too.
- Debt consolidation loans: When you have debt coming from various areas, you can consolidate it into a single monthly payment. Paying off large amounts of medical bills or many credit cards is easier when you have one single payment to take care of. This is where people can get into trouble because it’s easy to build up credit card debt again when you only have one payment. Rein in your credit card temptations!
Image via WalletHub.
