Everybody needs financial supports. Today or tomorrow you can get into debt. So, it is better to check the information about different types of loans previously to be educated. In this post, we will talk about personal loans.
If you think “I need 500 dollars today”, it often means you will apply for a loan. Have you ever use it? Do you know what is the difference between personal loan and payday loan? Do you need exectly this loan and how to repay it in time? Watch video below to find answers to all the questions and even more.
Why Do I Need a Loan?
When taking out a loan, you have to compare all the available loans and choose the best one. To do this, you have to understand why you want to take it out. The majority of people take out loans because they don’t have large sums to pay for big expenses. The most common reasons of securing financing are consolidation debts, buying a car, home improvement, funeral expenses, starting a business, vacation, medical expenses, paying off credit cars, wedding or other special events.
Pros and Cons of Secured Loans
- Build your credit – if you make full payments on time, secured loans can help people with low score build their credit.
- Lower interest rates – a collateral makes lender feel more secure, that’s why he can propose you lower interest rates.
- Better terms – when taking out a secured loan, you get larger loans to cover big purchases.
- Loss of asset – In case of default on your online loan, you may lose your asset (home or car);
- Damaged credit – if you don’t do repayments in time, your credit score will decrease.
Pros and Cons of Unsecured Loans
- Build your credit – unsecured loans can help you build credit as well.
- No risk of assets – these loans do not require a collateral. That’s why you don’t risk losing your car or home;
- Easier application process – it is easier to fill out unsecured loan applications because they don’t require evaluating a collateral.
- Still held responsible – even if your loan isn’t secured, make repayments in time. If not, a lender can sue you in court.
- Smaller loan amount – since your loan is risky, lenders will no be eager to give you large sums.
- Higher interest rates – because of the risk, the interest rates get higher and other fees can be added.
- Damaged credit – if you fail to make timely repayments, your credit score could decrease.