Did you know that less than half of all Americans have enough cash on hand to cover a $1,000 emergency? If you fall into this camp, don’t worry! There are several types of personal loans that are easy to get when you need cash fast.
Whether an unexpected bill just popped up or you need to pay for some life-changing travel plans, personal loans can help you in a pinch. Here’s what you need to know.
3 Types of Personal Loans for When You Don’t Have Collateral
If you don’t have collateral like a house or a car, you’ll need an unsecured loan. These are riskier for lenders, so they’re likely to cost you more. To get an unsecured loan, you’ll need a decent credit score and payment history.
Following are the three most common types of unsecured loans.
Just as the name suggests, a signature loan is guaranteed by nothing but your signature on a contract that says you agree to pay. These types of loans are available through banks and credit unions. If you already have a relationship with your bank, reach out and ask about their signature loan terms.
Personal Line of Credit
When you take out a personal line of credit, the lender approves you for a certain amount, but you don’t have to take it all at once. If, for example, you’re approved for $15,000, you can choose to take only $5,000 to pay for an expense. While you’re repaying that $5,000, you can still access the remaining $10,000 if you need it.
Credit cards aren’t technically a loan, but you can use them as one in a pinch. Essentially, every time you use your card, you’re borrowing money from the card issuer. Since these usually come with a high interest rate, you’ll want to take this route as a last resort.
Lower Your Rates with Secured Personal Loans
If your credit isn’t great or you want to pay a lower interest rate, a secured personal loan is likely your best bet. To get cash fairly quickly, you’ll want to try for a title loan or home equity line of credit.
Title loans require you to give a lender the title to your car in exchange for the money you need. This is often the best type of loan for people with poor credit who need money fast. They don’t require a credit check, and you can often get approved within a few hours.
Home Equity Line of Credit
A home equity line of credit usually comes with one of the lowest interest rates among the different types of personal loans. It works much like a personal line of credit you secure it by putting up your home as collateral.
A word of warning: before taking out a secured loan, make sure you have enough money to make your monthly payments. Otherwise, you could risk losing the collateral you’ve put up!
Are You Ready to Take Control of Your Finances?
Now that you understand the types of personal loans available to you, you’re ready to start getting the rest of your finances in order. Check out our money blogs for all the information you need to start making smarter financial moves today!