If this world was perfect, you would never have to borrow money. Unfortunately, we don’t live in an ideal world. Things happen, and you could easily find yourself in financial distress. To move ahead in life, you might need help along the way.
In some cases, a word of encouragement is enough. In others, you need tangible help, such as taking a loan you can pay in easy monthly instalments. Luckily, there are many loan options available to help you out.
Here are six different loans you can pay back monthly:
1. Payday Loans
A payday loan will never fail you in an emergency. It’s an easy loan that you can pay back monthly. Since they are loaned based on your salary, a payday loan is payable at the end of the month. To apply for one, visit a payday store or place your application for payday loans online. Bring your paystub along and some form of identification. While these are the critical documents required to secure a payday loan, you may want to call ahead to establish if there are other requirements.
The most crucial factor that’s considered when applying for a payday loan is the ability to pay it back. Once you pass this hurdle, place your application. You will have monthly installment payday loans upon approval.
2. Unsecured Loans
A loan is referred to as “unsecured” when it does not require a guarantee or collateral. Should one default on payments, there’s no collateral to risk losing. However, to qualify for an unsecured loan, a good credit score is required. Otherwise, you may have to pay higher interest if your credit score is bad.
3. Secured Loans
A secured loan is the complete opposite of an unsecured one. In this case, to get a loan, you need to put down an asset as collateral. This could be a car, a house or expensive jewellery of commensurate value. Since these loans are secured, they are considered less risky by lenders. As such, they attract lower interest rates. The major downside is that should you fail to pay the loan, you might easily lose your collateral.
4. Cash Secured Savings Loan
This savings loan is sometimes referred to as a reverse or a “backward loan.” It allows you to gradually deposit the amount of money you wish to “borrow.” Once you reach your target, you can withdraw the amount you have been depositing in the form of a loan.
Simply put, a reverse loan is ideal when you want to quickly shore up your credit score while at the same time helping you save a substantial amount of money within a short time. Nonetheless, a reverse loan attracts an interest rate that is lower than that of other conventional loans. The beauty of reverse loans is that a credit check is usually not necessary.
5. Credit Card Loans
A time may come when you want to consolidate your debt. Instead of taking a loan to do this, how about using a balance transfer credit card? Promotions exist that one can participate in that allow the transfer of your current debt to a credit card at a lower rate. This is usually for a limited time, such as six months every year.
Although transferred balances attract low-interest promotional rates, your regular credit card already has a higher interest rate than the more popular personal loans. It’s therefore prudent to take a loan instead of using a credit card to borrow funds. However, credit cards are paid back monthly and can be used for short-term financial requirements.
6. Home Equity Line of Credit (HELOC)
In a home equity line of credit, your home is all the collateral you will require. It’s the fraction of the home that truly belongs to you. In a word, it’s your equity. You can calculate your equity on a home by subtracting the current mortgage balance from its actual market value. For instance, if your mortgage balance is $200,000 for a home valued at $350,000, your equity is $150,000. This is the amount from which you can borrow up to a certain percentage.
The HELOC available to you is always less than the outstanding mortgage. Just as you would with a personal line of credit, having a HELOC means you have equity to borrow from whenever you need funds. The beautiful thing is that you only pay interest on what you’ve borrowed, not on the entire equity.
A line of credit prequalifies you for a loan whenever you need it. As long as you have enough equity in your home, you can take a loan at any time you need it. A HELOC facility requires one to make monthly minimum payments. However, you can decide to pay off the principal and the interest as quickly as you wish.
There are several loan options you can take advantage of to meet a financial need.
