Solutions for All Situations
Unless you have unlimited cash at your disposal, loans are simply a necessity of life.
Fortunately, there are a variety of loans out there so you’re sure to find the right one for your unique situation.
Here’s a look at the types of loans you might want to explore.
Personal Loans
An unsecured personal loan is a great way to quickly pay off personal debts and cover just about any expense.
Since it doesn’t require collateral, lenders will look at factors like your credit score and income to determine your interest rate.
Read more about Personal Loans
Business Loans
Business loans are designed to help you pay for a wide array of business-related expenses, such as startup costs, payroll, equipment, and inventory.
The two most common types of business loans include startup loans and traditional business loans.
Read more about Business Loans
Debt Consolidation Loans
If you have a lot of high-interest debt, debt consolidation loans should be on your radar.
With a debt consolidation loan, you can make one, affordable monthly payment and won’t have to keep track of multiple debts. Just make sure you can land a lower rate than the rates you’re currently paying.
Read more about Debt Consolidation Loans
Unsecured Loans
Unsecured loans don’t involve collateral or an asset you own, like your house or your car.
But you may need good to excellent credit to qualify for them. Fortunately, some lenders are lenient and willing to lend to those with fair and bad credit.
Read more about Unsecured Loans
Auto Loans
Auto loans can provide you with the funds you need to pay for a new or used vehicle. These loans are secured so if you default on your payments, the lender will have the right to repossess your car.
Emergency Loans
Emergency loans are intended to cover unexpected expenses, such as car repairs or medical bills.
If you’re in a financial pinch and don’t have the cash to cover an emergency, these loans can be a real lifesaver.
Read more about Emergency Loans
Home Renovation Loans
If you’d like to improve your home, home renovation loans are worth exploring.
You can take one out to pay for just about any home repair or home improvement, like a new roof, deck addition, kitchen remodel, or bathroom update.
Read more about Home Renovation Loans
Medical & Dental Loans
Medical and dental loans may help you pay for medical and dental bills.
If you don’t have insurance or your policy often leaves you with out-of-pocket expenses, these loans can step in and make your medical or dental care more affordable.
Read more about Medical & Dental Loans
Secured Loans vs. Unsecured Loans
Secured loans make sense for mortgages and auto loans, but are they a good idea for personal loans?
How Secured Loans Work
Secured loans are typical when you buy a home or car on credit. Securing your loan for a big-ticket item with the big-ticket item you’re borrowing money to purchase enables you to buy it without having to save hundreds of thousands of dollars.
Some lenders offer personal secured loans that are less reliant on a good credit score – these loans require that your property, such as your home, car, or equipment used at your business, be used to secure the loan in the event that you’re unable to make payments.
This can be a risky proposition should you be unable to make your payments, as the lender could foreclose on your home, repossess your car, or confiscate your equipment to satisfy the debt obligation. An alternative to this is an unsecured loan.
How Unsecured Loans Work
Unsecured loans don’t require you to risk your collateral. Instead, they’re approved based simply on your credit and your ability to pay back the loan. Terms and interest rates for both unsecured and secured loans vary, so finding the loan product that’s best for your personal or business needs is important.
How to Choose the Best Loan for You
Not all loans are created equal. To find the right loan for your budget and needs, consider these factors.
Type of Loan
The two main types of loans are secured loans and unsecured loans.
A secured loan, like a car loan, requires collateral like your vehicle. If you default on your payments, the lender may seize your collateral.
An unsecured loan, such as an unsecured personal loan, doesn’t involve collateral and largely depends on factors like your credit and income.
Loan Amount
Loan amounts vary from lender to lender. But in most cases, lenders offer personal loans of up to $50,000.
Some lenders will even allow you to borrow up to $100,000. Keep in mind that the highest loan amounts are reserved for borrowers with good to excellent credit.
Loan Repayment Period
While repayment periods depend on the lender and loan type, anywhere from one to seven years is typical.
While a longer repayment period means lower monthly payments, it will also cost you more in interest. If possible, choose the shortest repayment period you can afford to save on interest.
Lender
There is no shortage of lenders out there. But not every lender is reputable. Before you move forward with a loan from a specific lender, do your research.
Make sure they have high rankings and positive reviews.
Credit Score
Your credit score will be important, especially if you choose an unsecured loan. To land the lowest rates and most favorable terms, you’ll need a high score.
If your credit isn’t in the best shape, however, don’t worry as some lenders are more flexible and may still lend to you.
Interest Rates
The interest rate you lock in will determine your overall cost of borrowing.
Ideally, you’d choose the loan with the lowest interest rate. But if your credit is fair or poor, you may have to settle for a higher interest rate than you’d like.
Origination and Other Fees
Origination fees, late fees, and insufficient funds are a few examples of fees that many lenders charge. If you can, go with a lender with minimal to no fees.
Compared to traditional lenders with brick-and-mortar locations, online lenders tend to charge lower fees.
Special Perks
Some lenders go above and beyond for borrowers with unique perks.
These might include free credit score monitoring, hardship assistance, autopay discounts, loyalty programs, and personalized financial advice.
Your Ability to Pay It Back
Before you commit to a loan, make sure you can confidently repay it according to the terms in your agreement.
The monthly payments should fit in well with your budget. Look at your income and calculate your debt-to-income ratio to make sure the math works.
How Quickly It Can Be Funded
There are many lenders that offer same-day or next day funding. But some lenders might take a bit longer to distribute your funds. If you have an emergency expense, for example, fast funding should be a priority.
Questions to Ask Yourself
When deciding to apply for a loan and choosing which loan is best, you’ll want to consider your needs and goals.
By asking yourself some key questions, your finances will be better off in the long run.
A loan should help you meet a financial goal, which may be consolidating debt, buying a car, or anything in between.
You should hold off on taking one out unless you need the funds for a specific purpose that will improve your finances and situation.
Just because you qualify for a debt consolidation loan, doesn’t mean you should accept it.
A debt consolidation loan only makes sense if you’re able to land at a lower interest rate than the rates you’re paying on your other debts and know you can save on interest.
It might be tempting to choose the first loan you find. Doing so, however, can cost you.
To secure the best deal for your situation, shop around and compare lenders.
Fortunately, many lenders will let you prequalify and check your offers without any impact to your credit.
There are so many loan options on the market so you should be able to find one or a couple that check off all your boxes.
If you come across a loan but the interest rate is a bit higher than you’d like, continue to shop around. You may find what you’re looking for eventually.
The loan your family member or friend chose isn’t necessarily the right loan for you.
Factors like the purpose of your loan, your credit score, when you need the funds, and what type of monthly payment you can afford will help you make the most informed decision.
