Discover the Different Types of Personal Loans You Can Apply For

 

Personal loans come in a variety of options, each with its own features, benefits, and drawbacks. So, if you're considering applying for a personal loan, it's important to know the different types of personal loans available in the market. 

In this blog, we'll explore the various types of personal loans, their features and benefits, and the scenarios when they are best applied.

Secured Personal Loans

Secured personal loans are backed up by collateral, such as your house, car, or any other asset. This means that if you can't repay the loan, the lender can seize your asset to offset the debt. 

Although these loans require collateral, they also offer lower interest rates and higher borrowing limits. Secured loans are best for individuals with assets that can be used as collateral and those seeking lower interest rates.

Unsecured Personal Loans

Unlike secured loans, unsecured personal loans don't require any collateral as security. These types of loans are based on your creditworthiness and your ability to repay the loan and typically come with higher interest rates since the lender takes on more risk. Unsecured loans are best for individuals without assets to use as collateral.

Debt Consolidation Loans

If you have numerous debts with high interest rates, a debt consolidation loan may be a great option for you. Debt consolidation loans consolidate your debts into one loan, with lower interest rates and preferable payment terms, making it easier to repay your debts. 

Debt consolidation loans are best for individuals facing numerous debts or high interest rates.

Lines of Credit Loans

Lines of credit loans are a form of revolving credit, similar to credit cards. You can draw from your line of credit as often as necessary, as long as you don't exceed your credit limit. 

With a line of credit loan, you only pay interest on the amount you've used, giving you more control over your finances. Lines of credit are best for individuals in need of a continuous source of funds, such as small business owners.

Payday Loans

Payday loans or cash advance loans are short-term loans with very high interest rates, meant to be repaid on your next payday. These loans are typically for individuals without sufficient savings and cannot rely on traditional lending institutions. 

Payday loans should be taken as a last resort due to the high interest rates that make it difficult to repay.

Final Thoughts

In conclusion, taking out a personal loan is a serious decision, and it's important to choose the right kind of loan that suits your particular circumstances. 

Whether you need funds for home renovation, debt consolidation, or a new business venture, it's essential that you evaluate your needs and budget to determine the type of personal loans you can apply for and those you are best suited for. 

Always remember to borrow only what you need and can repay, and work with trusted lenders like those at Foti Financial Services.

Dutton Lending: What Personal Loans Can Do To Help

Getting a personal loan can help out when used correctly. By definition, it’s a debt product made available to a person needing money from a bank, credit union, online brand, lender, or even a personal friend. They can be secured or unsecured, giving a person a sizable amount of money that must be paid back over time.

Lenders make their money with upfront costs and/or interest rates. Picking out the correct type of personal loan makes a big difference because of money management after the fact. Looking for the right amount of loan money, interest rates, and other stipulations matters.

Dutton Lending is just one company that offers personal loan choices. They work with individuals so that they can pick out the right option for them. It doesn’t have to be an overwhelming decision at the end of the day.

Secured Personal Loans

To acquire a secured personal loan, a person has to put up an asset of some sort to act as collateral. People will put up something of pretty significant value to get the most money possible. Think about major purchases in the past, like a vehicle or property.

It works best as a way to counteract having a lower credit score. People needing quite a bit of money at once will also need to do this to avoid huge fees. However, a person needs to keep up with their loan repayments so that the collateral isn’t seized by the lender later on.

Unsecured Personal Loans

One of the most popular options in today’s world for personal loans is an unsecured solution. It’s swift and easy to get approved, given that a person has at least good credit. Online lenders like that in lending can give people money in a matter of hours.

Shopping around for the right interest rate with an unsecured personal loan is very important. Some of them are pretty high up there, as lenders are trying to protect themselves from taking on a lot of risks. The faster someone pays off their unsecured personal loan, the less they get hit by interest.

Debt Consolidation Loans

Accumulating debt and being unable to pay it off on time can lead to people looking for answers. When this is the case, a debt consolidation loan can help pay off debt faster by saving a little on interest.

Dutton Lending offers low-interest rates for debt consolidation loans, and they can shave months or even years off the repayment process. Another benefit is that borrowers can make the repayment process much easier by paying for one loan.

Some people have trouble keeping up with all the payments (ex. five credit cards with balances on them). Paying one bill a month due on the same day every month becomes much easier to manage.

Fixed and Variable-Rate Loans

A fixed-rate loan never changes over the repayment term. It’s great for people who want routine in their life, as a borrower makes the same monthly payment each time. The majority of personal loans will work this way.

Variable-rate loans are also out there. This is a bit of a gamble, as monthly payments could go up or down, depending on what the lender decides. If the monthly total is high, it can be challenging to budget for payments on variable-rate loans. Fortunately, variable-rate loans are becoming less common.

Joint Loans

Qualifying for a loan can be challenging with poor credit or no credit history. A way to still get money is to apply for a joint loan with a co-signer. As long as the person can find someone else with a strong credit score or history, they can assume responsibility. It’s a risk for them, but making payments on time helps to rebuild trust.

This type of loan is most commonly found within families. For example, parents might take out a joint loan for their kids as they are just starting their adult life. They might not have the credit history to do it on their own, so parents take the risk to help. This works out for both parties as long as everything's paid back on time.

What are the Positives and Negatives of a Personal Loan

The general positives and negatives of a personal loan can sway people one way or another when needing financial assistance. Keep in mind that personal loans offer outstanding flexibility, high-speed access to cash, and a way to avoid costly credit cards. 

Convenience plays a role in personal loans being so popular in today’s world. Dutton Lending is a great company to go to for a personal loan.

The negative aspects of personal loans are similar to credit cards in that a failure to pay is a bad decision. Not only will additional fees be tacked on, but interest rates will start to make the loan expensive. 

There are also negative credit issues since lenders will report history to credit bureaus. As long as a person keeps up with their payments and doesn’t sign up for crazy interest rates, personal loans have more positives than negatives.

How to Find the Best Personal Loan Option

Lending options are available in-person and online as long as a person looks around. There have never been more options available to shoppers. 

Unfortunately, that also means there are a lot of bad lending options out there that ultimately get people in more trouble because of the fees they try to charge.

Dutton Lending strives to be an alternative to that type of lending. Dutton Lending has always offered competitive rates and personal attention for those who need it. Getting guidance from a company like Dutton Lending before making a final decision on a personal loan can make all the difference in the world. They can ask a few questions and make a decision in a matter of minutes.