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An inside look on the best type of loans for you

19th April 2021 Print

If looking to borrow money is one of your top priorities in the coming months, you’ll want to make sure you are finding the best products. Not only do you need to determine the type of loan you require, consideration has to be made for how much, how long for and what the purpose of the loan is. To help guide you, here are some of the best types of loan available depending on your needs.

Specialist Loan Types

Above and beyond regular personal loans and credit card options are specialist loan types that can help consumers with specific needs. Whereas traditional lenders have general loan products they’ve always catered for, there are many online lenders able to offer loans that can address a particular requirement. If you need a loan to cover an unexpected financial emergency, for example, payday loans online are a quick option that can provide the flexibility you may need. As short term options that lend smaller amounts only when you need it, this is ideal for borrowers needing a quick injection of cash they can pay off within a few months rather than years. Other specialist loans can be ideal for those with a poor credit rating, providing a helping hand where other lenders can’t.

Unsecured Loans

Ideally, you’ll want to find loans that present a low risk to you if for any reason you struggled to maintain repayments, for example, losing your job. This is why unsecured loans are best in this scenario as none of your personal belongings are attached to the credit agreement. Whilst this doesn’t mean there is no penalty for arrears or defaulting, it stops the borrower from using your personal property to resolve the situation. Compare this to secured loans such as a mortgage or car logbook loan, the risk with these is the property itself is used as collateral, reducing the risk to the lender if things go wrong. This is why no matter the type of loan you are going for that you ensure maintaining repayments won’t be an issue. 

0% Interest Loans

If the purpose for borrowing money is to purchase a particular item or product, there are 0% interest loans out there. This means no interest will be charged during the term of the loan, only the value of the goods you are buying. The difference with this type of loan is that you can’t use it to borrow money to put towards anything you want, such as with a personal loan. Those types of loan have a fixed interest amount to enable you to spend the funds on whatever you want. With a 0% interest loan, these are usually offered by companies or retailers to help you purchase goods, for example, furniture. Rather than taking out a loan that will charge you interest on top of the value of the goods, if 0% interest loans are available for that particular company, it’s worth considering this to help save you money.

The next time you plan to take out borrowing for an emergency, a particular product or holiday, consider the types of loan available to you first. That way, you can make a much savvier decision on your finances and hopefully save money along the way.