Different Types of Loans: Deciding Which Loan is Right for You

Since there are so many different loan options for you to choose from, it is important that you take enough time to choose one in particular that will match your needs exactly. The more you learn about each of these borrowing options, the better of a decision you will be able to make. The loan you choose will determine a lot of important things, including your likelihood of paying it back on time. This research will help you out tremendously with finding the right financing solution.

Unsecured Loans

An unsecured loan is given to a person based almost entirely on the state of their credit. These loans can be difficult to get if you don’t have very good credit, but they do come with low interest rates if you are approved. One of the best things about these loans is that you won’t have to worry about having your home or car repossessed if you default on yours.

The fact is that no collateral is needed is definitely one of the best things about this borrowing option. There are a lot of banks and credit unions that give out these loans, so you will have numerous lender choices to explore.

Secured Loans

In order to get a secured loan, you will have to put some sort of property down as collateral. The property you use must have a value that is equal or greater to the total amount that you are borrowing. A lot of people use their home or vehicle as collateral for these loans. The biggest drawback of secured loans is that they can be quite risky. It is particularly important that you make sure you’ll be able to pay back a secured loan on time. If you fail to pay back the loan, you will most likely use the property you have put up as collateral.

The great thing about secured loans is that the interest rates tend to be pretty reasonable, and the borrowing limit is fairly high. This means that you will be able to borrow as much as you want, as long as you have property that is worth enough to back it up. There is also the fact that you don’t need to have good credit to get approved for one of these loans. As long as you have proper collateral, the lender will be more than willing to look past a low credit rating.

Payday Loans

Payday loans are very common throughout the UK for a number of reasons, including the fact that they are easy to get and offer fast cash for those who are in a dire financial situation. These loans are short-term, so you will be required to take care of the balance on your account with the next pay cheque you receive. Your interest rate will most likely be higher than a personal loan, but there are ways to keep it to a minimum.

It is very important that you take the time necessary to find the right payday loan lender, because not all of them are reasonable or even legitimate. Credit is usually not an issue when applying for a payday loan, so your low score probably won’t get in the way of approval. The more time you spend looking for the right lender, the better off you are going to be.

Instalment Loans

An instalment loan is paid back over a course of months or years in regular payments (usually once a month.) There are a lot of good things about these loans, such as that you’ll have plenty of time to return the money you have borrowed. One of the drawbacks of instalment loans is the fact that you will be paying more interest. Instalment loans are usually given to those who borrow larger amounts of money.

Guarantor Loans

A guarantor loan involves a middleman of sorts, such as a friend or family member. This person, who is called the “guarantor”, agrees in advance to pay back the loan if you are not able to. A lot of people are getting these loans because they have fairly low standards/requirements for the borrower, but finding a qualifying guarantor is another story.

The lender will only accept someone as a guarantor if they have their finances in order. This person must have a solid credit rating/history as well as a stable employment history and adequate income. You can get one of these loans with bad credit as long as the person who is acting as your guarantor has a high score.

Car Loans

If you want to finance a new car, a personal loan is probably the way to go. This type of loan is considered a secured loan because the collateral is the car you are buying. If you stop making payments on the loan, the car is repossessed by the lender. These loans can have terms that range from one year to five or six, depending on the amount you borrow.

Peer-to-Peer Loans

While it may be true that peer-to-peer loans are a pretty new borrowing option available to the public, it is one that you should seriously consider taking advantage of. You will find that these loans have very high borrowing limits and pretty good interest rates. Private lenders give out these loans, so they are not covered by FSCS (Financial Services Compensation Scheme) like traditional loans.

What to Consider Before Getting a Loan

No matter which type of loan you decide to get, there are always certain things that you will need to take into consideration. It is crucial that you spend enough time looking for a good and reliable lender, because not all of them can be trusted. You should also make a point of trying to get the best possible interest rate by comparing loans online. When you do this research before making the leap, you will be able to get the money you need with the fewest strings attached.

Benefits of Personal Loans for College Students

Most college students don’t have a whole lot of money, and sometimes it is necessary to cover an important expense that comes up suddenly. If you need to catch up on rent, utilities or even just buy some school books, a personal loan could be an effective solution. These loans help millions of people each year, and they are certainly worth looking into. If you have any type of expense that you need to pay for but don’t have the money, this is an excellent option to explore before making a decision.

No Collateral Needed

One of the best things about unsecured loans for college students is that they do not require any collateral. This means that you won’t need to put up any collateral to get the loan. A secured loan would require you to use some sort of property as collateral in case you cannot pay off the loan, but that isn’t the case with these. Unsecured personal loans are a great way for young people to get the money they need without having to deal with this particular requirement. This makes taking out a lot far less risky overall.

Lower Interest Rates

Taking out a personal loan costs far less than using a credit card because of the lower interest rate. The less interest you have to pay on your loan the better, so it’s important to keep this in mind. The rate that you pay on your loan will depend on the lender you choose as well as your credit, but most people are able to get a fairly good deal. A fixed interest rate is typically the best option for college students, as it does not change over the course of the loan term. This means that you won’t have to worry about having to pay more interest later on.

Improve Your Credit Score

It is particularly important for young people to work on boosting their credit score as much as possible, and getting a personal loan is just one way to do that. Paying off your loan on time can do great things for your credit rating. If you do not pay back the loan, however, your credit will be negatively affected. The better your credit is, the easier it will be to get future loans with an even lower interest rate. Even being late on your loan can lower your credit rating, so you will need to keep that in mind.

Get Cash Faster

Personal loans are a faster way to get money than applying for a credit card and waiting for it to come in the mail. The amount of time that it takes for you to get your money will depend on a few different things, but you can expect to receive a check within a few days. The processing time for credit cards is very slow, which is why more and more young people have been turning to these loans to get the money they need. If the expense you need to pay for is urgent, you will certainly need to keep this borrowing option in mind.

Many Different Lenders to Choose from

There will be numerous banks and credit unions that you can turn to for a personal loan. While most people choose the bank they already have an account with, you don’t necessarily have to. The more time you spend exploring these options, the better your chances will be of getting a great deal. There are even some private lenders who give out these loans, so you should spend as much time as you need looking into the choices you have before deciding.

Use it for Whatever You Need

While student loans can only be used on very specific things, personal loans can be used however you need them. Whether you want to purchase a used car or catch up on some bills, this loan option is multipurpose and potentially helpful. You may be asked what you plan to spend the money on, but most lenders are fairly flexible and will work with you. Lots of college students get these loans, so banks are accustomed to helping them.

Low Minimum Borrowing Amounts

You will most likely be able to get a personal loan even if you need a fairly small amount. The minimum borrowing amount will depend on the lender, but you can usually borrow as little as £300 or £400. This is very useful if you just need to pay for something relatively inexpensive but don’t have the money for it. Take the time to find a lender with a borrowing minimum that works for you.

Minimal Paperwork

These days personal loans can be obtained online, so you won’t have to worry about incurring a ton of paperwork. Some banks will still require you to fill out some paperwork, but there are many online options to consider as well. You will need to give an electronic signature on the loan contract if you get one online, which basically just means typing out your name in the appropriate field. The less paperwork you have to deal with, the faster you will be able to get the money you need. Even those who go down to a bank in person to get a loan shouldn’t need to spend that much time filling out paperwork before they can get the money they need.

Final Thoughts

While it’s true that getting a personal loan can be highly beneficial if you are a college student in need of financial assistance, approval is never guaranteed. One of the best things that you can do to increase your chances of getting one of these loans is to choose the right lender. Good credit is important for getting a personal loan, though young people without much credit can still get approved. The more time you spend learning about these loans, the better off you will be. A personal loan is worth looking into if you need money for any reason.

8 Tips for Paying off an Instalment Loan

If you have chosen to get an instalment loan because you need money for something, it is important that you get some helpful tips for paying it off on time. The fact is that failing to pay off your loan have a hugely adverse effect on your credit, so you will want to avoid it at all costs. This type of loan can be extremely helpful when you need money, but you will need to make sure you pay it off in full by the agreed upon date. These tips will help you increase your chances of clearing your debt promptly.

1. Pay More than the Minimum Amount

The larger your loan payments are each month, the faster you are going to pay off your loan. And while it might be tempting to just pay the bare minimum, you will need to make a point of paying a bit extra, as much as you can afford. Take some time to run the numbers to figure out the maximum amount you can afford to pay on your loan each time so you don’t go over your budget. You also want to make certain that your lender won’t impose any penalties for paying your loan off early. This will save you quite a bit of money on interest.

2. Earn Money on the Side

One great way to pay off your loan earlier is to find ways to make extra money on the side. Whether it is getting a second job or even just selling some of your unwanted items on eBay, there are tons of ways that you can supplement your income temporarily. This will help you to get your load paid off weeks or even months early. The internet is an excellent resource for making money, so you will need to take full advantage of it. If you are particularly knowledgeable in a certain subject, you might want to consider tutoring online for extra cash.

3. Set Up Automatic Repayment

You will definitely want to set up automatic repayment so that the lender can automatically take the money you owe them out of your checking account on the due date. This will prevent you from forgetting about paying off your loan. Some people are also tempted to purposely pay back their loan late, but this will only mean having to pay the lender much more in the end. A majority of lenders offer this option, and it’s a good idea to take advantage of it. It will also be one less thing that you will have to worry about regarding your loan.

4. Choose a Reasonable Lender

It is important to find a reasonable lender before getting your loan so that you can increase your chances of paying it off on time and without incident. Some lenders are more flexible than others, which is why it’s so important that you do your research. Make sure that you select a lender that is okay with you repaying your loan early, because some lenders will actually charge you additional fees. There are a number of ways to tell what kind of reputation a lender has, including reading reviews for some of them online. This information will help you choose the right business to borrow from.

5. Get a Reasonable Interest Rate

The higher the interest rate on your loan is, the more likely you will be to have trouble paying it back on time. When you are looking into your loan options, make sure to get quotes and talk to different lenders so you can score a low interest rate. The rate that you pay will depend on the lender you choose, so keep this in mind from the very start. The better your credit is, the easier it will be to get a good rate that is reasonable. A fixed interest rate is typically best for instalment loans.

6. Get Help from a Friend

If you think that you might not be able to pay back your loan on time, you could always turn to a friend or family member for the money you need. This could help you to continue making your payments on time, but you will obviously still have to pay back whoever you borrowed the money from.

7. Cut Back on Certain Expenses

There are probably a number of things in your life that you don’t really need to spend money on but do. If you want to make certain that you pay back your loan without any issues, make sure that you eliminate all non-essential expenses until you have taken care of the balance on your account. This could mean not dining out or foregoing certain other luxuries, at least for a while. You’ll likely be surprised at just how much money you can save by doing this, so give it a try.

8. Visualize a Deb-Free Future

Nobody likes being in debt, and it’s important that you focus on your future without this loan hanging over your head. Every time you start to feel overwhelmed by all the money you owe, simply picture a moment when you will no longer be held back by it. By doing this you can greatly reduce the stress of having a loan to pay off, which in turn will help you work harder to pay it off. There is no point in stressing over something like this, so remind yourself that everything will be okay.

Importance of Paying Back Your Loan on Time

The importance of paying back the money you owe your lender on time cannot be overstated. If you want to maintain your good credit, it is crucial that you do this. There are lots of methods you can use to avoid being late on your loan, and you will need to utilize as many of them as possible. Those who are late paying back an instalment loan will face some hefty penalty fees, which is all the more reason to follow these tips.