There are a lot of different types of loans out there, and it can often be quite confusing to find the type of loan that’s right for you. That’s why LoanPig wants to help you find the right loan for you and tell you all about the different types of loans you can get.
We’ve summarised the main types of loan for you in one neat video, follow it up by reading our article and you’ll be an expert in no time.
Payday Loans & Short Term Loans
Payday loans can come in all sorts of shapes and sizes, but usually you will find payday loans as short term loans, lasting from a few days to a few months, for small amounts. Payday loans tend to have APR that’s very different from other types of loans because they are designed to be paid back as quickly as possible, meaning that there isn’t a lot of time for you to incur interest if you pay them back by the repayment date. These loans are suitable for emergencies and when you apply for payday loans with LoanPig, we can find the right loan to suit your circumstances. You can choose how much you want to borrow and for how long and we will help you find the right loan and lender. However, if you need to borrow a large sum, or you expect that it may take longer than a few months to pay back your loan, you might want to consider an alternative.
Credit Union Loans
These non-profit community organisations can offer low interest loans to people that have been rejected by other lenders and banks. However, there are quite a few different types of credit unions and each one has its own criteria that need to be met in order to be approved for a loan. These might relate to where you live, the industry you work in, or membership for a specific organisation. Under the right circumstances, credit union loans can be a great alternative to payday loans, but, regrettably, not everyone is eligible for them.
Employer Cash Advance
If you have been hit by a sudden big bill, you do have the option of asking your employer for an advance on your next paycheque. It can be uncomfortable to ask for an advance if you don’t have much of a relationship with your employer, but this can be a beneficial way of borrowing money if you don’t want to take out a loan. With a cash advance, your employer would lend you the money you ask for while taking it out of your next paycheque. Otherwise, they might offer for you to work overtime in exchange for the loan, and the great thing about this type of loan is that there are no fees or interest to worry about.
While credit cards can be a good option for emergency expenses in some situations, using a credit card can be expensive if you don’t keep track of how much you’re borrowing. Withdrawing cash from your credit card might result in a small fee and while credit card APR rarely goes higher than 30%, you can get higher spending limits for certain credit cards that are difficult to pay back. If you do need to use a credit card for emergency cash, you should opt for credit cards with lower interest rates or consider applying for a cash advance card, which allows you to withdraw money like a debit card.
When you have an authorised overdraft with your bank, you can withdraw money beyond the amount that you have in your bank account. You can borrow up to a certain limit and each day that your bank account has a negative balance you will be charged a daily fee. These fees can stack up quite quickly if you’re finding it difficult to pay out of your overdraft, however certain banks do offer accounts with a 0% interest overdraft that allows you to borrow without being fined. Just be sure to check that you have an authorised overdraft before you try to borrow the money. Without an authorised overdraft, you could incur some serious fees and fines when your bank account goes into a negative balance.
Borrowing From Family And Friends
Borrowing from the people close to you has certain pros and cons. On the one hand, loans can put some strain on the relationship you have with the person you are borrowing from, especially if you’re not able to pay them back. The best option is to avoid trying to borrow large sums from your loved ones. But, if you need only a small amount for a short time, you may be able to avoid an awkward situation. Just be sure to give them a firm date as to when you can return the money to them, pay them back as soon as you can, and perhaps offer some interest as a thank you.