We all love shopping! But is using plastic the best way? Choosing the right type of loan can allow you to borrow money at a cheaper rate. It also helps you eliminate the risk of no-repayment since you can easily manage it. So here are the different types of loans and how they are used.
This type of loan does not require you to use your personal belongings as collateral. The lender simply lends you money and you have to make sure that you are able to repay it over the agreed time.Unsecured loans often come from money lenders and online lenders. You can check out my-quickloan.com for a quick quote.
- Personal loan. This is a loan that banks and other money lenders offer for your personal use. This is available for smaller amounts, but the interest rate maybe higher compared to other types of unsecured loans. If your credit score is okay, your application is more likely to be approved. Just make sure that you ask the lender for a quote before you apply.
- Peer to peer or social loans.This is a way of borrowing money from another person instead of applying to a bank or other lending institution. This is not dependent on your credit score. This type of unsecured loan is very competitive as they offer better rates than most banks. Also, applying for a peer to peer loan is easier than other kinds of loans.
- Guarantor loan. This is very similar to a personal loan; it’s just that a second person acts as a guarantor in case you fail to make a payment. Securing a guarantor reduces the risk of non-repayment for the lender. This might be the best type of loan if you are borrowing for the first time or if you have a bad credit score.
- Bad Credit Loans. Theseare offered to people with a bad history of repayment. It is similar to other types of unsecured loans, but the rates are higher than the rest.
In contrastto unsecured loans, these allow you to apply for a loan to be able to purchase a property.
- Homeowner loan. It is also known as a home equity loan. It considers the value of the property when you apply for a loan.
- Bridging loan.This is most commonly used by landlords and other property developers. You have to own property or land for you to apply for a bridging loan. You can use this if you are buying a property, developing an existing property, paying tax, or even when you are settling a divorce.
- Vehicle loan.This is used to buy a car or any type of vehicle. The agreement is secured by the vehicle you are about to buy.
Before you apply for a loan, it is vital to know how you should use it. This will help you determine what type of loan you should secure. Consider a variety of options and look for the cheapest rate available. If you have a good credit rating, you might find cheaper rates than usual. You may also want to consider the length of term and repayment plans before agreeing to the contract.