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Different Loans for Different Purposes

Sometimes unexpected events come along that require your immediate attention, such as a car repair or medical bill. When this happens if you don’t have wiggle room in your budget or savings account, it can cause stress.

The good news is that there are several loans and cash advance options available that can get you the money you need to pay for these additional expenses. Since there are many different types of loans, it’s a good idea to find out which one best suits your personal needs. Before taking on any loan, make sure that you understand the terms of repayment and that you can make the installments on time.

How much do you need to borrow?

Loans vary, and to apply for the appropriate loan, it’s important to figure out the exact amount that you need to borrow. If it’s something like a car repair that costs roughly 1,000 dollars, taking on a personal loan for a period of 12 months can get you the money you need quickly. If, however, you prefer not to have continuous payments looming over your head for that length of time, a personal loan offered online through a lender like MaxLend can give you the same advantage of a quick payment with a short-term loan. The payments will be higher but you will only have to secure them for a few months.

Taking a cash advance from a credit card

You can also choose to take a cash advance from your credit card. The interest rates are usually much higher than a personal loan, however, if you are unable to secure a personal loan due to a high debt-to-income ratio or a lower credit score, this can offer a quick fix. If you choose this as the best option, try to pay the balance off as quickly as possible to avoid paying two or maybe three times more than the actual cost of the repair.

When you need access to a large sum of money

If on the other hand, you need a major home renovation and you have a mortgage, a HELOC gives you access to a large sum of money that you can borrow from as you need to. You must have a good standing with your mortgage and the interest rate derives from the current market and other variables. You can also borrow funds from your 401K. You can usually borrow up to 50% of your savings and while there is interest attached you are paying the money back to you.

Removing debt and freeing up your money

A consolidated loan or a personal loan is ideal if you have a lot of outstanding debt in the form of credit cards and medical bills. These monthly payments can occupy a large portion of your budget and by consolidating them into one much lower monthly payment you’ll not only free up money but you’ll put an end to the high monthly interest rate.

Payday loans

If your credit score is poor and you need access to money fast for an unavoidable expense a payday loan can get you money in your hands usually within a few days. However, the repayment terms are short-term and the interest can amount to two, three, and even four times more than the original borrowed amount. In this instance, if you have nowhere else to turn, such as a family member or friend, make sure that you make every effort to pay the loan off quickly.

Even the best-planned budgets can need help from time to time. Just make sure before you put your signature on the dotted for the loan that you understand the repayment terms and that you can afford the loan. Learning to be financially responsible will save you from paying higher interest rates or getting denied a car loan down the road.

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