It’s alarming, but 51% of Americans have less than 3 months’ worth of emergency funds. Even worse is, 25% have no emergency savings at all!
If you fall into either group, then a sudden financial drain can spell doom. So you need to know your options in case you’re faced with a gargantuan bill. Plus, it doesn’t hurt to know what types of personal loans there are so you can jumpstart your milestones.
Keep reading to find out the best personal loans available today.
Unsecured Personal Loans
This is probably the type of personal loan you’re thinking about when the term is mentioned. It’s “unsecured” because you don’t have to put down any collateral to get money from a financial institution.
Since this is a riskier type of personal loan, the interest rates are typically higher. The higher your credit score, the lower they’ll be.
Secured Personal Loans
Secured personal loans are where you offer up collateral for the loan, such as your car or mortgage. Because there’s less risk involved for the lender, this enables them to set lower interest rates.
Again, the higher your credit score, the lower the interest rates will be.
Here, your personal loan has a set interest rate for the entire life of the loan, which means your monthly payments will be the same every month. It’s easier to budget and you can lock in a good interest rate if you’re lucky.
With a variable-rate loan, the interest rate will fluctuate, meaning the interest you pay over the lifetime of the loan can be lower than with a fixed-rate loan. But it’s a gamble, so it’s not great for those who don’t like to leave things up to chance.
As the name suggests, this type of loan is for people who have ITINs, or Individual Tax Identification Numbers. This is a unique number given to people by the IRS who don’t/can’t get a Social Security Number (SSN).
So if you were fretting about personal loan options because you don’t have an SSN, this is definitely a viable option. If you’re interested in ITIN loans, then discover more with First Pryority Bank.
These are the worst types of personal loans to get, but we felt payday loans needed to be mentioned so you steer clear of them.
Payday loans are short-term loans where you borrow against your next paycheck. The interest rates are insanely high; it’s not uncommon to see ones over 500%! So if you’re unable to pay back the loan, you’ll end up in a neverending cycle of debt.
Payday loans are great for getting cash in hand almost immediately though. So you should only use payday loans as a last resort, and only if you’re confident you can pay them back on time.
Choose From These Types of Personal Loans
By learning about the types of personal loans available, you’ll be able to breathe easier should you need some financial help. So whether you need some money to tide you over for the year or you want some help buying a car, there are many options out there that are perfect for your situation. Don’t be afraid to reach out and get some much-needed help!
If you’d like more advice on personal finances, then find what you need by browsing our blog!