I recently posted an article about things you should know before borrowing money. If you find yourself in a situation where you need some cash, a good way to get a quick infusion of money is to get a personal loan. But, the choices when it comes to personal loans are immense, with many different types to choose from. Here are some tips for choosing the right personal loan for you.
You’ve probably heard a lot of negatives about payday loans, but they do serve a good purpose and can be helpful if done right. These were the original short term personal loans – you get cash, at a given interest rate, due in a couple weeks (originally designed to coincide with your next paycheck). If you need some cash quickly, and don’t need a lot (say less than $500), this can be a good option. However, the interest rates and fees are harsh if you don’t repay it on time.
Bank Personal Loan
The next most common option is a bank personal loan. However, in order to qualify for a bank personal loan, you typically need to have good credit. If you do, you can get a larger sum of cash, compared to a payday loan, and typically longer terms. You may also be able to get better interest rates. Once again, though, good credit is a must.
Peer to peer lending has been growing significantly over the last few years, and has become a viable alternative to other short-term lenders. However, peer-to-peer loans typically have longer terms – up to three years – and interest rates are 100% based on what investors are willing to pay. However, the market still usually charges higher interest rates to those with poor credit histories or risky propositions.
Finally, if you are leery about a loan based on your credit, you could always consider getting a pawn loan. This loan is based on the value of your stuff that you want to pawn. If you’ve watched the hit show Pawn Stars, you know they offer you a loan based on what they’re willing to give for your item – but it’s always negotiable.