Monthly Archives: April 2013

Choosing the right type of loan

Choosing the right type of loan

loan-cartoonWith various types of loans available today, the wisest financial move is always to pick the one that’s best suited for your financial circumstances and needs. Here are some of the most common types of loans.

Secured loans require an asset that serves as a guarantee to the lender. Because of this, secured loans can be easier to get, but beware – failure to repay them will result in the loss of an asset. Secured loans sometimes come with lower interest rates and they can be a good choice when the repayment period is long.

Unsecured loans don’t require an asset. As a consequence, the lenders don’t have such easy means to collect debt in the events of loan default, which is why unsecured loans have higher interest rates and can be difficult to get.

Payday loans are smaller, short-term loans where your next paycheck typically becomes a payment guarantee. Since payday loans have high annual interest rates, they are often used as a last resort – you will probably only want to use them in an emergency. Due to confidential nature of your financial information, Internet-based payday loans require an additional amount of caution! Be sure to choose a reputable website. If you’re not sure, is the way to go!

Conventional loans are also known as “mortgage loans”. Often perceived as a safe type of loan, conventional loans also aren’t insured by a government entity. Keep in mind that there are different types of conventional loans you can choose from.

Open-ended loans let you borrow money repeatedly. This type of loan is widespread – credit cards are in fact open-ended loans.

Closed-ended loans are the opposite: once repaid, the money cannot be borrowed again. Student loan is one such example.

Advance-fee loans are something you’ll want to steer clear from! This is a scam in which “lenders” will try to manipulate you into sending them money before they grant you the loan. Of course, once you send the advance fee, the “lender” will disappear with your money.

Regardless of which type of loan you are considering, make sure you know the basics and remember this golden rule: always take a loan that you can afford!

Don’t turn to other means that promise heaps of money for nothing, because if it sounds too good to be true, it usually is. Online casinos for example offer nice bonus for joining and promise big wins, but if you don’t do it right, you’ll always walk out a looser. If you consider online gambling, we’d recommend you start with blackjack!