Loans have become a part of our life. Thanks to this phenomenon, we are able to use other people’s money when our own is not enough. Lenders earn money from them, borrowers get everything they need, without denying themselves anything. At the same time, borrowing has a positive effect on the economy. It’s an idyll. It remains only to determine which loan is better to take in a given situation.
What is the best loan to take if you need a small amount?
Unsecured consumer loans are the most popular in the credit sector. Most often, these are credit products that can be taken in cash, although this should also include commodity loans (it is difficult to call a full-fledged collateral a mobile phone or a juicer), and an overdraft.
There are two distinctive features of such loans. The first is the speed of registration. Almost any such loan can be obtained in a maximum of half a day. However, for such loyalty to the bank will have to pay a lot of overpayments, the rate on unsecured loans is usually twice as high as the overpayment on secured loans.
Such loans continue to be the easiest way to get what you want. Especially if it is not possible to collect a lot of information or there were previously small problems with loans, which affected the credit history.
Large secured loans
If you need more than 5.000 dollars, you can’t do it with just one passport. Moreover, the bank will not only carefully read the lines of your credit report, but also require evidence that you have income and it is sufficient to repay the debt. Depending on the formality of your income, the amount of the loan and the type of loan, other guarantees of repayment may be required.
So, for example, when applying for a student loan, the bank will certainly ask that the parents of the borrower-entrant act as guarantors. A mortgage loan implies that the purchased housing will certainly become collateral. In addition, such loans are usually expensive in terms of processing time – you will not be able to issue them in a couple of hours. And the same mortgage, for example, can take several weeks at all.
There is also a positive point, The rates for those loans for which additional guarantees were provided will always be lower than for unsecured loans. Moreover, providing such guarantees allows you to convince the bank to turn a blind eye to any inconsistencies of the borrower with the terms of the program. So when thinking about which loan is better to take, it is worth considering this.
This product is essentially a revolving credit line that you can use with a bank card attached to your account. You can use the allocated limit as much as you want, as long as the borrowed money is returned to your account in accordance with the terms of the agreement.
Credit cards have a lot of advantages. You don’t have to go to the bank every time you need a loan and submit an application, worrying about its approval. In this case, the rate on your card will be fixed for the entire time until you close the account (unless, of course, you overlooked the clause in the agreement about the possibility for the bank to change the rate unilaterally).
They also have a so-called grace period. If you return to the bank all that you have withdrawn from the card within a certain time, you will not have to overpay for this loan. However, not all credit cards are equipped with this function.