During our lives there are many times when we may need to secure some extra financing.
This may be to fund a business, to pay for a house or to help dig us out of an immediate financial hole. There are various loan options available to you, each with its own fees and interest rates. These can vary enormously from loan to loan so it is vital that you do the proper research in order to choose the right loan for you.
To help you out, this article is a guide to your different options when applying for a loan.
1. A Payday Loan
One of the most common types of loan that people take out is called a payday loan which is great for customers who want to borrow a small amount of money quickly. It is called a payday loan because its purpose is to enable you to get to your next payday without having a financial disaster. There are many people who find themselves a bit short of cash every now and again and so a payday loan helps you to get through the next week or so until you receive your paycheck.
The experts at BSTCredit.com.sg/ explain that with a payday loan, you are usually able to borrow up to six months of your usual salary. Borrowers must be over the age of 18 and must be able to prove that they earn above a certain amount. This earnings threshold varies from provider to provider so make sure to do your homework and don’t just accept the first offer or first refusal that you receive.
It is important to note, that whilst useful and very common, payday loans generally have the highest rates of interest among different loan options so make sure that you read up on every single element of the loan policy before you sign anything.
2. A Secured Personal Loan
A personal loan is an excellent way to obtain money when you need it which you can pay back at a point in the future. To successfully apply for a secured personal loan, you will generally need to guarantee it with one of your assets such as your car or home.
This lowers the risk to the lender as they know you have something tangible and valuable which they can take if you fail to pay back the money as agreed. Because of this, the interest rates on secured personal loans tend to be the lowest available out of the different loan options.
There is an obvious downside to a secured personal loan in that you are risking your asset if something disastrous happens and you find yourself in a position where you can’t pay the money back.
3. An Unsecured Personal Loan
An unsecured personal loan is different from a secured one because you don’t have to use one of your assets as collateral. The application process for an unsecured personal loan simply involves you reviewing the loan provider’s fees and interest rates and then deciding the duration of the loan that you want to take out.
The provider will then establish a regular repayments schedule which enables you to budget your life around the repayments. The advantages of an unsecured personal loan is that they tend to be amongst the simplest and quickest loans to take out and you don’t have to risk your car or home.
Unsecured personal loans can be specifically tailored according to your financial needs and capacity and can be used for anything like purchasing a new car or paying off debts.
4. A Line of Credit
A line of credit is a unique loan option as it has no finite period of expiration. This enables you to use the money as and when you need it and to pay it back at a time convenient to you. It works in a similar way to a credit card except that you don’t physically have a plastic card.
With a line of credit you will be able to obtain money that does not exceed the credit limit which you first agree to with the credit provider. After this limit has been set, it is very easy to move the money into your bank account whenever you need to. The interest you pay with a line of credit is on the money you spend not on the entire value of the credit line.
There are various options available to you when applying for a loan and which can be very useful for a number of things in your life. A loan can be a great way to help pay for everyday costs, to make a one-off big purchase, and to help fund a long-term business or projects. Before you sign for anything, make sure you have done all the due diligence and know exactly what you are agreeing to.