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What are the Different Types of Consumer Loans?

types of consumer loans
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Are you wondering what are the different types of consumer loans? Here are the most popular lending options offered to consumers.

We share solutions when you need money fast and a comprehensive overview of other popular lending options that you can use to get money now.

There are many reasons why we seek loans but most of them revolve around the fact that we are short of cash. This article will show you that there are many loan options online. You can opt for any method to borrow when you need to get money now.

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Bear in mind that there is no best method, as each method has its pros and cons. That’s why it is advisable for you to read and understand the loan terms and conditions before you decide. You should conclude on a lending option that fits your financial condition.

In the latter part of this article, you are provided with other popular lending options that you can also use to get funds to cater for your personal finance goals.

4 Solutions When You Need Money Fast

So, let’s proceed with the lending options for when you need money now in order to put your financial plan to work.

1. Online Personal Loan

One could think of considering a personal loan online because of two reasons….to fund personal needs or to consolidate a debt. A personal loan can be secured or unsecured, but most of them are unsecured as there is no requirement for collateral.

Online lenders provide borrowers with an option to take out an online personal loan. The interest rate on a debt is often determined by your credit score and the length of the repayment terms. Here are the top personal loans we’ve found:

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$5,000 to $100,0005.99% - 16.99%

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$1,000 to $35,0007.99% - 35.89%

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fiona personal loan table fiona trust pilot $1,000 to $100,0004.99% - 35.99%

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zippyloan fiona trust pilot
$100 to $15,0005.99% - 35.99%

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2. Online Payday Loans

Perhaps you need to pay an unexpected vet bill, repair a broken down vehicle, or cater for an urgent or unexpected financial hardship. A solution that can help you is taking an online payday loan as it comes with fast approval and it is tailored to help in urgent situations.

An online payday loan is an amount of money borrowed, often at a high-interest rate with the agreement to pay it back on the next payday.  Lenders can also provide you with the opportunity to take out a payday loan online. Such a loan can also be termed as an online paycheck one.

3. Online Cash Advance

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Online cash advance loans are another loan option that you can opt for in case you want to make $500 fast, for example. It is the same as the online payday loan as both are meant to be repaid quickly and on a short-termed agreement.

The difference is that an online paycheck loan is to be paid off with the next paycheck, while an online cash advance loan can take longer. An online cash advance can also be taken out when you are in an unexpected or urgent financial struggle.

4. Online Installment Loan

If you want to take a loan, either small or big, but you want to schedule out your repayment, most of the online lenders provide you with an online installment loan lending option. You can use this lending option to schedule out your repayment over multiple periods of time.

So, you can use any of them to borrow money fast and read the rest of this article, if you want to know other popular lending options that are available.

Other Popular Lending Options

With this section, you will have a comprehensive overview of other popular lending options that you can use to get funds to finance any project you have in mind.

1. Peer-to-Peer (P2P) Lending

You can borrow money via a social media lending or a crowdfunding platform. This is where strangers are ready to borrow money or lend it.

Based on the borrower’s credibility, the lender can strike a deal. This is called the Peer-to-Peer Lending. It is a popular lending option people use.

2. Credit Unions

Credit unions are nonprofit cooperative firms. They are a group or community that are reputed for lending funds at a lower interest rate compared to that of the banks.

3. Financing Companies

Perhaps you want to borrow a huge amount of money with a longer repayment term, or you need money to purchase some expensive appliances. It’s time to visit financing companies. They offer such loans at competitive rates and the approval process is quite quick.

4. Government

You can borrow money from the U.S Government and the public chartered agencies, and an example is the Quasi-public agencies. This lending option provides you with a convenient interest rate where you are permitted to extend the repayment period. Paperwork here is the con.

5. Banks

Banks can provide you with many types of loans like personal loans, consumer loans, mortgage loans and so on. It also involves paperwork and the lending bank can sell your debt to other banks or finance companies.

6. 401(K) Loan

This is the last lending option a borrower should consider. Because the loan is taken directly from the borrower’s 401(k) account balance. A repayment plan is scheduled out based on the fund you took out, and its interest rate. The fund is paid back into the borrower’s 401(k) account using an automatic payroll deduction.

6 Things to Consider Before Taking a Personal Loan

Are you considering taking out a personal loan? It’s important to do your due diligence before taking on any debt.

Below, I will share with you 6 things to consider before taking out a loan.

1. Taking out a personal loan requires a great credit score

A credit score is a crucial factor in deciding the eligibility of personal loans. Having a 700 credit score or more improves your odds of being approved for a personal loan application. However, this does not mean that if you have a bad credit score, you will not get approved for a personal loan. You can apply for personal loans even if you have a bad credit score.

2. You can get a personal loan even if you’re self-employed

Both salaried employees and self-employed people can take out personal loans. Self-employed individuals can opt for personal loans based on their credit score. In the case of a personal loan, the lender analyses the personal financial health and credit score of the borrower.

3. Personal loans can be used for anything

As soon as you take out the personal loan, you are free to use it for anything you wish. A lot of business people have invested the borrowed personal loan into their small business.

4. There are taxes on personal loans

Yes, there are taxes imposed on a personal loan. You can declare the tax deduction on the interest portion of your EMI. There is no deduction on the main component. The tax welfare is permitted if there is a valid expense on your part.

5. You can apply for as many personal loans are you want

Even if you have another loan, such as a student loan or student refinancing loan, you can still apply for a personal loan. There is no such limitation that if you cannot have more than one personal loan. If you have the capability for repayment, you can easily apply for a personal loan. Your suitability is decided by your repayment capability.

6. It’s easy to see if you qualify for a personal loan

In this modern age, obtaining a personal loan has become fast and simple with digital access. A personal loan by SoFi is an example where you can have your loan paid out quickly and within days. Checking the eligibility for the personal loan is possible within a minute and online approval can be done within 3 minutes.

So, people, we’ve picked up the myths to help you go in the right direction. If you are still struggling for some extra money, go for personal loans. With a good credit score, you can use the loan at a low-interest rate.

Conclusion

This article is helpful. It shows you the lending options available online and it shows that there is no best option. You need a lending option that fits your situation. The article also provides you with a comprehensive overview of other popular lending options available out there so that you have a basic idea of where to start.

Hope you found this article useful on the different types of consumer loans.

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