Your Guide to the Different Types of Loans Available
A loan is a sum of money given to somebody with the expectation that it will be repaid at a later date, usually with interest. Many different types of loans are available, each with its own interest rates, terms, and repayment options.
Choosing the right loan for your needs is important to avoid any unnecessary financial burden. Generally speaking, loans fall into two categories: secured and unsecured loans.
Secured Loans
A secured loan is a type of loan in which the borrower pledges an asset, such as your car or property, as the collateral for your loan. This makes the loan a secured debt owed to the creditor who gave the loan.
- Logbook Loans
A logbook loan is a loan that uses your car as collateral. The loan is secured against your vehicle, which means the lender owns your car until the loan is paid back. If the borrower fails to repay the loan, the lender may repossess the car.
Unsecured Loans
A loan that is not secured by an asset is called an unsecured loan. This type of loan is often given based on the borrower’s creditworthiness rather than on any collateral. Typical unsecured loans include credit cards, personal loans, and student loans.
- Short-Term Loans
A short-term loan, also known as a payday loan, is a small loan that you can borrow and repay within 12 months or less. These loans are usually unsecured, meaning they do not require collateral and come with a higher interest rate.
- Same-Day Loans
A same-day loan is a short-term loan typically processed and disbursed on the same day it is approved.
- Payday Loans
A payday advance loan is a short-term loan that can help you cover expenses until your next paycheck. These loans are typically small, ranging from $100 to $1,500. While payday loans can help you in a pinch, they can also be costly and even make your financial situation worse if you’re unable to repay them on time.
- Guarantor Loans
A guarantor loan is a type of loan where someone else agrees to be responsible for making the loan payments if you can’t. This is usually a family member or friend. If you default on the loan, the person who is your guarantor will be responsible for paying back the loan.
- Bad Credit Loans
Bad credit loans are generally more expensive than other types of loans because the lender is taking on a much greater risk by lending to someone with bad credit. These loans are often used by people with bad credit or no credit history who have difficulty obtaining credit elsewhere.
Factors to Consider When Choosing a Loan
- How much you need to borrow
When taking out a loan, it is important to only borrow the amount of money you need. It can be tempting to borrow more money than you need, but this will end up costing you more in the long run. Make sure you only borrow the amount of money you will be able to pay back.
- Your loan eligibility
When looking at interest rates, always make sure to check the eligibility requirements and the small print. Often, the advertised APR is only available to a small number of customers. This is especially true for banks that offer preferential rates to their customers.
Ready to Apply for a Loan?
There are many types of loans available to consumers, each with its own set of benefits and drawbacks. It’s important to do your research and compare different loans before choosing one that’s right for you.
If you need no-credit online loans, check out King of Kash. We have been providing affordable no-credit check installment loans for almost 40 years. Apply today to see if you qualify and get your money fast!
Cary Silverman is a consummate entrepreneur having sold multiple companies during his 20 years of business experience in the financial industry, but for him, it isn’t about the money. His success is rooted in his passion to focus on doing something better today than it was done yesterday. These days, he’s the CEO of Waldo General, Inc. that oversees the operation of King of Kash.