Types of Loans

There are many reasons a person may find themselves having financial difficulties and turning to loans in order to solve their problems, at least temporarily. The good news is that people who are having a bit of money trouble but have managed to maintain good credit scores may be able to obtain unsecured loans. There are many loans available for people who have good credit. In fact a person with good credit will almost always be able to get a loan. In addition, there are even bad credit unsecured loans available provided some sort of co-signer or other guarantee is present. Some of the loans available are as follows.

Payday Loans

These loans are also called cash advance loans, instant loans, or even simply cash loans. The way they work is that a persons next paycheck is used as collateral. For example, if you have a paycheck coming in the next two weeks in the amount of $1000.00 and find yourself needing cash before that time, you may be able to borrow up to 70% of that amount against your paycheck. This is why these loans are called payday loans. They are given in lieu of the paycheck and will need to be repaid when the check comes. The bad thing about these loans is that they typically carry an interest rate as high as 30% of the original loan amount. These loans are more geared toward people who do not possess a good credit score and are left with no other options.

Personal Bank Loans for Debt Consolidation

If you have a good credit score as well as a good banking history with a certain financial institution there is a very good chance you could be approved for a personal loan. People take personal loans out for many things but one of the most popular is for debt consolidation. This is especially true if a person is trying to protect bad marks from going on their credit score because of unpaid debts that are quickly piling up. A personal loan, when used for debt consolidation, will help a person get back to a clean slate and one easy payment rather than a lot of payments at various interest rates. While the loan will still need to be repaid and the debt will still be present, it will seem a bit easier to pay back with a fresh start.

Unsecured Business Loans

If a business has been in existence for a number of years and has developed a good relationship with a number of vendors as well as their bank, it is possible for them to obtain an unsecured business loan. This is always based on the credit line of the business however in some cases a personal guarantee signed by the owner will help get an approval faster. This is especially true if the owner of the business has an excellent credit score. These loans are designed to help businesses with things like making improvements, expanding, new equipment costs, and many more things a business may need in order to keep operating to its full potential. In addition, if a business has had a great history of paying bills on time and has been running smoothly for some time yet hits a rocky spot, a loan can help keep things going until the economical situation improves.

Loans are a necessary part of life and almost everyone will find themselves in a situation where they may be considering one, at one point or another. The most important thing in consideration of a loan is to examine each loan and read all the terms and conditions to be certain there will be no surprises at a later date. Loans can be an asset if they are used correctly and paid back according to the contract.