5 of the Best Types of Personal Loans For First-Time Money Borrowers

Paying for your wedding, consolidating your debt, buying a car, and emergency expenses are some of the top reasons to get a personal loan. Do you relate to these situations? If so, you may be looking for options to meet your financial needs.

Depending on your financials and situation, you may be eligible for a certain type of loan. However, making the right call will come down to understanding the different types of personal loans.

Not sure which loan is right for you? We’ve got you covered. Here are the top personal loan types you should consider to meet your financial needs.

1. Unsecured Personal Loans

Unsecured personal loans are one of the best financing options available. These loans allow you to meet your financial needs without offering collateral. When you choose this type of loan, your interest rate may be higher than other options, but you won’t risk any assets.

This type of loan is also available for businesses, but the terms may vary. If you need to secure funding for your business, you should check out these loans to obtain the capital you need.

2. Credit Builder Loans

Is your credit score less than pretty? If you answered yes, you may consider a credit builder loan to boost your score.

Depending on your lender, you may have to deposit a certain amount of money on a savings account. After your credit builder loan is approved, you’ll start making on-time payments that your lender will report to the credit bureaus.

3. Secured Personal Loans

Lenders often choose to extend secured personal loans to limit their risk. In most cases, you’ll secure your loan by using an asset such as your home, car, or savings.

If you don’t repay your secured loan, the lender will keep the asset you offered as collateral. Payday and car title loans are other secured loan options, but these lenders often charge higher interest rates.  Note, if you’re in Canada, you should consider checking out smarter.loans.  Its a nice little website located in Toronto. They have a number of good options for cash loans or other loan types.

4. Debt Consolidation Loans

If you’re drowning in debt, this loan might be your best option. A debt consolidation loan helps you obtain the funds you need to pay off your debt. The biggest advantage is you’ll lower your interest rates and make only one payment a month.

5. Variable Rate Loans

You may think all personal loans charge a certain interest rate, but that’s far from the truth. Interest rates vary when you get a variable rate loan since it’s tied to a standard rate set by banks. If this rate varies, so will your interest rate and monthly payment.

So You Learned the Top Types of Personal Loans to Consider, Now What?

Understanding the types of personal loans available will help you make an informed decision. Let’s face it; not all loans are alike or meet your financial needs. While one type of personal loan may seem like the right call, you should always do your research.

Consult a lender to learn about your options. The representative will go over your needs and finances. Ask your potential lender about their requirements and approval process.

Before applying for your loan, it’s vital to make sure there’s a high probability of getting approved. You should also take a hard look at your financials and check your credit score. Keep in mind lenders use different criteria for approval, but always consider your credit and financials when considering your application.

Still have questions? Keep checking the rest of our site to find more helpful tips and articles to take care of your finances.