For most of us, life is quite fast-paced. Our increasing need to get things done faster derives from the fact that our lifestyle comes with plenty of financial challenges that require swift decision making and resolution. In order to understand how to cope with such challenges, people often seek loan advice from online service providers that offer quick solutions through online platforms or mobile apps.
Nowadays the possibilities for quick access to cash are anything but limited and there are loan providers that are doing a great job in offering services tailored to the customer’s needs.
However, in order to be given the best of advice and get access to available funds, you need to consider checking your income sustainability before taking the right loan decision.
The process of checking your loan eligibility has been automated, so in most cases, it takes minutes before you are able to decide on what type of loan you would want to apply for.
We are going to roll out seven types of loan options that consumers can look at when they need to borrow instantly accessible money.
1. Emergency Loans
As the name suggests, an emergency loan is a type of loan which is used for unexpected and urgent financial obligations.
When the borrower is in need of immediate cash approvals and all other possible options have been exhausted, an emergency loan comes to the fore.
When approved, emergency loans can be credited to your account within one working day and in many cases within less than 30 minutes. As one would expect, these loans are typically expensive and short-term.
They can be accessed quite promptly but you need to make sure that you make due payments on time as well or you will be sanctioned from the loan provider with incomparably high-interest rates.
An emergency loan can come in different forms, including personal loans, payday loans, and credit card cash advances.
2. Personal Loans
A personal loan is funds that one can get from a traditional bank, online loan provider or even a credit union. The personal loan is a type of loan that allows flexible use, instant funding, and short to mid-term repayment options from two to seven years.
If you find yourself in financial struggles, want to set up your own business, consolidate an existing high-interest loan, or even pay a pricey medical bill, a personal loan can come quite handy.
The main drawback is that personal loans are normally expensive loans with higher interest rates. Why is that? The majority of personal loan plans are not backed by collaterals.
What does that mean? Usually, loans are secured, they are backed up with assets, as this gives confidence to the lender to approve the loan. This makes secured loans cheaper as long as you make repayments due in a timely fashion.
3. Payday Loans
The payday loan falls also under the emergency loan category and is fundamentally based on the applicant’s paycheck and credit profile. The lender will extend credit based on the borrower’s income and financial capability.
This type of loan is ideal when you need a small cash injection until you get your next salary. A payday loan is a short-term credit with significantly high-interest rates, so make sure you are able to repay as the interest fines can escalate rather quickly.
The repayments can extend to two weeks or simply by your next payment.
Take note that this high-cost loan can charge you three-digit rates on an annual basis on the top.
You will also hear payday loans as cash advance loans or check advance loans.
4. Credit Card Advance
Credit card advance is cash borrowed against your credit limit. It’s essentially a cash withdrawal with your debit card but instead of your bank account balance, the money comes for your credit limit. The main prerequisite, of course, to have an existing account that you can access with your four-digit PIN and you are able to request the money.
The special characteristic of this type of money borrowing is that there is no grace period available for you, meaning that the interest rates start automatically adding up.
It goes without saying, that APR (Annual Percentage Rates) is well above the regular purchases.
In fact, most of the credit card issuers add a cash advance fee which can go up by 5% or more on top of the transaction amount.
The cash advance limit is normally lower than your credit limit. So, for example, if your available credit limit is 4000 USD you won’t be able to get this amount in cash.
5. Bad Credit Loans
These loans are designed for people with a low (bad) credit score or poor to no credit history at all. The bad credit history loans typically come with higher interest rates and stricter requirements so the lender can reduce the chances of not getting paid back.
Applying for a bad credit loan doesn’t necessarily mean that your income is low or insufficient. Your credit score is assessed upon the existence of previous healthy credit activity.
Lack of credit history or even past financial difficulties can also impact your credit score regardless of the amount of your income.
Personal loan seekers who have been turned down from their bank or any other traditional loan providers are most suited for bad credit loans.
6. Guarantor Loans
Another type of ‘unsecured’ loan.
A guarantor loan is a type of loan that is also not backed by collateral but requires a second party to guarantee that repayments are being made should the applicant fails to do so.
In other words, a family member or a close friend guarantees repayments in case you default.
The guarantor loans are suitable for people who have either a bad credit score or no credit history at all. In both cases, the lender is unable to offer loans due to a lack of confidence in the applicant’s financial credibility.
Usually, the guarantor has το fulfill certain requirements. Lenders expect the guarantor to be a property owner or hold ownership of sufficient assets to cover the loan.