Money troubles? Know the right loan to take
Taking out a loan is easy, but repaying it is not always as straightforward if you’re not well-informed of the various loans available.
If you’re experiencing the pinch of hard times, a loan can come in handy. It is however important to be aware of the pros and cons of the type of loan you take, what is required to qualify for it, and how quickly you will need to pay it back.
Get a personal loan
If you need money in a hurry, you can get a personal loan from a bank or financial services provider. This type of loan is “unsecured”, which means that you don’t have to use an asset like your home as security against the loan. The upside of getting a personal loan is that it’s easy to apply for one. However, your eligibility for a loan depends on your credit history, and whether you’ve ever had problems paying a loan back. The bank or financial service provider will also look at whether or not you are employed, and with what type of company. The amount of cash you can borrow and the time it takes to get the loan, varies between providers.
Apply for a credit card
Another option for getting out of financial trouble in the short term is to apply for a credit card. When you get a credit card, you are required to make repayments on a monthly basis. The added advantage of a credit card is a range of discounts and rewards you receive when you use it, such as air miles, or loyalty points. Upon application for a credit card, you’ll be assessed on your ability to make repayments of the loan in question, so a steady and a good credit history will come in handy. Depending on the credit limit you have and the terms of the credit card, you will see how much you can borrow and at what interest rate.
Get a payday loan
A payday loan is generally for a smaller amount of money than a personal loan, and they are designed for very short term needs. These loans are relatively easy to pick up, but payday loans should not be used to pay a long term expense. This is because payday loans have a much higher interest rate than other loans as you are required to pay it back as quickly as possible. It’s therefore essential to know that you will have money coming in immediately after you’ve taken the loan to avoid paying the hefty interest rates.
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