What do you know about personal loans, payday loans, and installment loans? Probably whatever you’ve been able to piece together from the internet. But if you’re in need of financial help, you should be aware of your options and their risks and benefits.
The term “payday” in payday loan refers to when a borrower writes a postdated check to the lender for the payday salary, but receives part of that payday sum in immediate cash from the lender. Payday loans are a risky alternative to a traditional loan that can put you into a cycle of debt tied to very high interest rates.
This is what you want! An installment loan will provide better rates and flexible options that payday lenders can’t or won’t do. They typically require a credit check, but allow you to borrow an agreed to amount of money and pay it back in installments with interest over the life of the loan. Repayment terms are often times flexible and work with your ability to repay the loan within a certain amount of time.
A personal loan is a type of installment loan. This is money you borrow for just about any purpose. It could be debt consolidation, car repairs, or vacation money. They are sometimes associated with high interest rates, but not always. There are online options as well as local options. While online may seem easier, consider working with a local company that considers more than just a credit score. There’s something to be said about personal service.
Types of Personal Loans:
- Unsecured: not backed by any personal collateral
- Secured: backed by collateral
Hint: Find a company that reports timely payments to the credit bureaus. This will help build or repair credit history. There are a few types of personal loans.
Fast cash loan lenders are also a type of installment loan and the fastest way to get cash. but these options usually carry high annual percentage rates. Loans from reputable online lenders may take longer, but they cost less. Shop around to get the lowest interest rate. Many online lenders will offer loans with a soft credit check to estimate your rate. Doing so won’t impact your credit score.
HOME EQUITY LOANS
If you own your home or are repaying a mortgage loan, you may have equity in that home. This means the home is worth more than you owe on it. In this case, your bank may allow you to borrow against that equity. Consider you owe $150,000 on your home, and your home is valued at $200,000. You may be able to borrow up to $50K against that equity. Your bank can explain their terms and how they obtain the value of your home.
Make sure you’re informed.