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Understanding Different Types of Personal Loans

secured and unsecured personal loans

In order to stop living paycheck to paycheck, establishing an emergency fund is vital. Having adequate savings is really the only thing that will keep someone out of debt for the long term. However, there may be times when an emergency happens before we are prepared. Multiple problems often happen at the same time. Loans can offer a solution to financial problems that happen all at once. Before borrowing, ┬áit’s important to understand the different types of personal loans to make the best choice for your situation. Unsecured Personal Loans Unsecured personal loans are just like they sound. You don’t have to put forth any collateral. The loan is not secured by something you own or by a co-signer. The good thing about this type of loan is that it’s quick and can provide cash almost right away. The bad thing is that the interest rates are higher than on loans secured with collateral, and generally, the repayment terms are short. If this type loan isn’t paid off within the agreed time period, huge interest charges will accrue. While the loan company can’t take any possessions from you for non-payment, they can ruin your credit. Don’t take an unsecured personal ...

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