Different Types of Loans: Understand Various Loan Products

Are you in need of a loan but aren’t sure what type is right for you? If you need to borrow money there are several different options depending on how much you need and what you need it for. Before you start applying it’s best to familiarize yourself with the different options that are available.

Keep reading to learn more about the most common loan products that might suit your needs.

Credit Cards

Although it might not seem like it, credit cards are considered a form of personal loan. Every time you make a purchase on a credit card you are borrowing the money from the credit card company with the promise you will pay it back, generally with interest.

The credit card is a revolving debt since the borrower can spend and pay repeatedly within their borrowing limit. This type of loan is very convenient and easy to use. However, it requires self-discipline when using because it is easy to borrow more than you are capable of paying back.

Title Loans

Title loans are loan options that require you to use an asset as collateral, generally your car. When borrowing this type of loan you have to own your vehicle outright and sign the title over to the loan company.

The loan company will then let you borrow up to 25% of the value of the car, and if you default on the loan they will keep the title and repossess the vehicle. These types of loans are generally around $1,000, sometimes more, and have an average payback period of 15 to 30 days.

Payday Loan

A payday loan is another way to get cash when you need it fast and can help you get from one paycheck to the next. They also have a short-term time period in which you have to pay it back. You can learn more about how they differ from a title loan here.

Obtaining a payday loan is easy since there are several physical locations you can visit to request one. You can even apply for one online and have the money deposited directly into your bank account.

These types of loans have a high-interest rate and should only be taken out when you have an emergency situation. Many borrowers find that they get stuck repeatedly borrowing to make it from paycheck to paycheck, and it can be hard getting out of that loop. If you’re looking for ways to ease the burden of payday loans, you may want to check out an article on Credit Summit that provides helpful insights.

Personal Loan

A personal loan can be obtained from most banks and generally requires good credit and proof of income. A personal loan can range from a few hundred dollars up to several thousand, depending on your needs.

These loans generally take a few days for the approval process and then another few days to receive the money. These aren’t a great option when you need money fast but can be great if you need a higher amount with a longer payback period.

Learn More About the Different Types of Loan Products Today!

There are plenty of different loan products available for when you need a little help financially. These loans vary in amount, interest, and repayment length so do your research before choosing the best one that fits your needs.

For more financial tips and information, be sure to visit our website daily!

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