Everyone wants to find that right way to avoid getting into debt, but sometimes avoiding debt requires paying off existing debt. Taking out a loan is one of the most common ways that people pay off debt or access money in order to afford something they need or want, such as a car or house. If you find yourself in need of cash and are interested in taking out a loan, it’s important that you first find out exactly what type of loan you need and which one makes sense for you. The following information provides detailed descriptions of the different types of loans available and will help you make the best possible decision.
- Hard Money Loans
A hard money lender is a company or individual that will loan you cash in exchange for a hard asset. For example, Washington Capital Partners offers multiple programs so that everyone can experience the financial security they need, even if they don’t all fit into one box. This asset-based loan requires you to pay back the loan in full and with interest, otherwise your asset becomes the property of the individual or company that offered you the loan. For instance, most people who are taking out a hard money loan will usually put their home, car, or vacation properties on the line. If they fail to pay, then they lose the asset.
Hard money loans can be a great way for you to access the cash you need, but you also need to understand the risk involved. Make sure that you are fully capable of paying the loan back before you sign anything or give up any assets. The last thing you want to do is fall into debt and lose your assets.
- Payday Loans
Payday loans are quite sketchy and may not be the best option. These loans allow you to receive a cash advance on your paycheck. Most places will take the money back from your first check, so you will need to be able to pay the loan back quickly. In addition, most of the payday loan lenders will only allow you to take out a small amount, so this may not be enough to cover your expenses. They also charge a very high interest rate, so you should avoid these loans unless it’s absolutely necessary.
- Student Loans
If you are planning on attending college, you will need a way to pay for it. Student loans are a great way to get your education in an affordable way. These loans are typically backed by the government, and you are eligible for student loans based on your current income and marital status. You don’t have to pay back your student loan until you have graduated from school, so this gives you plenty of time to find a good-paying job. Plus, you also get about 10 years to pay the loan back, so the payments are pretty small. In addition, there are plenty of student loan repayment programs out there that can help you manage your finances, pay your loan off early, or even receive a discount on your balance.
- Unsecured Loan
An unsecured loan allows you to receive money without having to put anything up as collateral. These loans are typically given by banks or other institutions that pay attention to your income and your credit score over anything else. If you have a decent income and a high credit score, you can usually locate an unsecured loan. These loans do come with repayment programs, so you will need to be sure you pay on time. Also, most of these loans will also come with interest and possible finance charges. And if you miss a payment on an unsecured loan, you can find yourself facing hefty fees as well as getting some negative markings on your credit score.
Whether you’re looking to take out a loan to pay off some existing debt or if you need one to make a substantial purchase, be sure that you are making an informed decision. Loans need to be repaid, and they can come with high interest, so make sure you can afford to pay it back before you make the decision to take it out.