How To Get The Right Loan For Your Needs

Getting hold of money quickly is difficult

It doesn’t matter how careful you are with your money, sometimes it just doesn’t stretch far enough and you find yourself needing to consider alternative finance methods to pay the bills.

However, with so many different types of loan available it can be hard to know which one best suits your needs. To make sure you don’t find yourself in a financial black hole here is a breakdown of three different types of loan available and the associated positives and negatives involved.

Personal loans

You can take out a personal loan from most banks provided they are willing to lend you the money, and you can use the money for almost any expense. If you want to take out a personal loan you will generally have to provide the lender with proof of your income and proof of any assets you have that are worth at least the same as the amount you’re borrowing.

If you’re approved for the loan you could get the cash within a few days. The downside to a personal loan is that the interest rates are usually quite high and some have to be paid within two years. This generally makes them unsuitable if you need finance for a business or other large project.

Credit cards

The basic idea behind credit cards is that the consumer (you) is taking out a loan that will be paid back at a later date. The major advantage of a credit card is that most merchants accept credit cards as a form of payment so you can use them for the majority of purchases.

The negatives of a credit card as a form of additional finance is that interest rates are some of the highest, they can be up to 20% per year, and it is very easy to get into debt with a credit card. The trick to staying on top your finances with a credit card is to make sure that you only use it for purchases that you know you can afford to repay.

Cash advances

Cash advances, also known as payday loans, are offered by companies as a fast way to get cash. In fact some loans are so fast that you can get your request approved, or denied, on the spot and have the cash within an hour.

However, fast cash comes at a price. Interest rates are even higher than those associated with credit cards and you may find yourself paying for additional fees for administration or late payments. Short term loans should only be used when other financial options are unavailable and you are 100% sure that you can make all repayments on the dates you agree too.

Whichever type of loan you choose it’s important that you understand all the terms and conditions before you sign on the dotted line and that you can afford to make any and all repayments by the dates stated in your contract with the loans company.

Wendy Lin, lives in Reading UK after moving from California. She likes to write on all aspects of modern life.

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