Car repairs, utility bills, medical fees, and many others are important expenses you will have to make in your day-to-day life. However, expenses such as those also account for the most unexpected situations you might find yourself in. This financial dilemma is not uncommon for most people.
Fortunately, many lending companies out there are willing to let you borrow their money that you will have to pay back over some time. Of course, they also have requirements that you need to comply with first to qualify for a loan, and one of these is having good credit. But what if you have a bad credit history?
You don’t have to worry. There are still many options available for you. Let’s take a look at some of these options.
Loans: What You Need to Know
The first thing you have to put in mind when it comes to loans is that they have different types. Each type allows you to borrow a certain amount and is intended for a specific purpose. Depending on what you want to spend your money on, you will have to choose the most suitable loan option for your situation.
Having good credit can give you a wider set of choices, but there is still a fair number of options even if you have bad credit. Lending companies, such as PersonalMoneyStore, are open to working with people who have a credit history that isn’t very ideal. What’s more is that applying for them is quick and easy, thus gaining a good reputation to many of their customers now.
On the other hand, here are the different consumer loan types:
If you find yourself needing an emergency fund, or if you want to consolidate existing debt, or maybe you just want to purchase brand new gadgets for home improvement, personal loans can be one of your major fund sources. There are four common types of personal loans:
- Unsecured Loans – This type of loan doesn’t require you to put up your home, car, or any asset as collateral, which is a good thing for you as a borrower, but a bit risky for lenders. This is why unsecured loans have a slightly higher interest rate.
- Secured Loans – unlike unsecured ones, qualifying for a secured personal loan means you can pay a lower interest rate. However, you have to put up any valuable asset as collateral.
- Fixed-rate – this type of loan allows you to pay your monthly dues in a fixed amount. This is a reliable alternative if you want to better prepare the amount you will pay for the month.
- Variable-rate – compared to fixed-rate personal loans, the interest rate you will have to pay per month varies. Variable-rate can benefit you if the overall market rates drop. However, it can be a disadvantage if the rates go up.
You apply for a mortgage loan if you want to purchase a home or refinance it, also known as a home equity loan. Mortgage loans also have numerous other subtypes, which include:
- Government-backed mortgages – this consists of the Federal Housing Agency loans, Veterans Affair loans, and US Department of Agriculture loans.
- Conventional mortgages – this type is not secured by the federal government. Instead, they are backed by private lenders or Fannie Mae and Freddie Mac.
Auto loans allow you to borrow money if you want to buy a car. Usually, the payment period lasts for three to five years. Your credit rating, annual income, and the amount you will borrow could also have an impact. A better credit score assures you better offers.
Loan FAQs: Question and Answer Portion
If you are still curious about loan things, you can scroll down to learn more.
Is applying for a loan a good thing?
Loans are created for a certain purpose: to help you with your financial crisis. They can be a great source of funds, especially when you are faced with an emergency.
Is it a good idea to consider a loan even if I have bad credit?
You might think that having bad credit means the end of the game, but that is not a problem at all. Applying for a loan can boost your credit score. As long as you can pay on time, keep a low balance, and do not apply for multiple credits, you can greatly improve your score. Installment loans, cash advances, and other short-term loans can be a great option for you.
How can I apply for a loan?
When you know what type of loan you want to apply for and how much you would want to borrow, the following processes can go smoothly. You have to prepare documents like a personal credit report, proof of income, check the eligibility criteria for your age (usually from 21 to 65 years old), and other qualifications.
You shall submit these documents to a suitable lender. With the advent of technology, applying for loans can now be done online.
Money is an essential element to support one’s daily grinds, but part of the harsh reality is not getting enough funds for a purchase or activity. Loans are created to let you have better sources of funds and escape that potential financial turmoil situation. Knowing your loaning options can save you a great deal of effort and guides you towards a better and wiser decision.