When I was growing up, I believed that I would never let myself go into debt. Credit was evil, and would destroy my life if I ever dared to open the door to it. This belief came from watching my parents struggle, making bad decisions which only dug them deeper into debt. It seemed like they’d never get out of it alive.
As soon as I had some money of my own, I realized two things. Debt is not always the result of bad decisions. And credit makes the world go round. If I wanted to buy a car, house, or start a business, I would need to embrace credit.
The fact is that owing money doesn’t have to be a bad thing. It definitely doesn’t have to be a downward spiral. As long as you stay away from quick fixes and payday loans, you can use credit to your advantage.
Still, they don’t teach you how to get a personal loan in school or college. Chances are, you know very little about the different types of personal loans, if you even know there are different types.
To help you understand a little more about which to choose, the following are five common types of personal loans.
1. Bank Loans
Banks, in something approximating their present form, have existed for centuries. The first place most people think of when considering getting a loan is their bank. Banks are reliable (barring the odd catastrophic crisis). You already have bank accounts, which makes it easier to keep track of and pay your installments. One major concern people have about banks is that their procedures have not caught up to the twenty-first century. Getting a loan can take ages, and most banks lack flexibility in what they offer.
2. Peer-to-Peer Loans
A relatively new innovation, peer-to-peer loans are presented as a modern alternative to banks. Rather than going with your bank’s rigid options, you match up with an individual who is willing to loan out a certain amount of money. It is quick and easy, and you have much more room to negotiate conditions. However, you do need a very strong credit score, as there is a lot at risk for the loaner.
3. “Zero-Interest” Credit Cards
A credit card doesn’t seem like the wisest loan option. After all, they charge high interest rates and come with few protections. Credit cards are useful for added buying power, not for paying off debt or acquiring assets. However, there are many credit cards that have zero-interest offers. They give you a grace period during which you pay no interest, and if you can pay it all back in that time, you essentially get a free loan. This should only be an option if you know you can pay the money back soon. Otherwise, it will leave you further in debt.
4. 401(k) Loan
Loaning money from your own pension fund has its drawbacks but it also has some appeal. You’re loaning money from yourself, and any interest you pay at least goes back to you. If you have good reason to believe you’ll be able to pay it back in due course, this can be a handy option in urgent situations. But beware of sabotaging your own future.
5. Credit Union Loans
Finally, credit unions are a natural place to look for a loan. They’re some of the most competitive, with low interest rates and fees. Credit unions are more attractive than banks, as they operate as nonprofits. They are technically owned by their customers. Becoming a member of a credit union is a smart move when looking for a personal loan. This is where you will find some of the best options around.
(Featured image by DepositPhotos)
Genomcore Finalizes its Entry into the United Kingdom after Increasing its Turnover by 73% in 2021
Genomcore has recently entered the market in the United Kingdom. In 2020, the company had a turnover of $912,000 (€750,000),...
The Fintech Ecosystem in Colombia Exceeds 322 Companies
The digital credit segment is the leader in Fintech service offerings, followed by payments and corporate finance, according to Fintank...
Valsabbina Bank and Siav Purchase 25% of MyCreditService
Valsabbina Bank and Siav will purchase 25% of MyCreditService, as part of an investment agreement. The entry of the two...
Cybersecurity Rising Among America’s Infrastructure Priorities
The proposed budget allocates $110 million to the Cybersecurity and Infrastructure Security Agency. Another $750 million is targeted for additional...
Axes Enters the Fertility Business in Spain: the Group Buys Ovoclinic Barcelona
Axes Capital is an international family office focused on investments in the following sectors: healthcare, real estate and renewable energies....
Cannabis6 days ago
On the Way to Cannabis Legalization: Frankfurt Positions Itself as a Pioneer
Featured6 days ago
Ant Group Creates a New Fintech Company: Chongqing Ant
Featured5 days ago
Crowdfunding for the Creation of a Legal Defense Fund for Wind Power Projects Completed
Business6 days ago
Fed’s Tools are Broken