When people need fast cash, they often think about a payday loan, but personal loans can be approved just as quickly from many lenders, and your bank account can be funded in a single day. But there are many things to consider before applying for this type of loan. The following are four of them.
Your credit rating
Personal loans are usually unsecured, so a lender will want to look at your credit rating. Many lenders will still lend money if your credit rating is not good, but there are limits to this. A recent bankruptcy, for example, may make a loan difficult to obtain. Other than this, the better your credit rating is, the better the interest rate will be, so if you have fair to good credit, you will likely save money on interest with a personal loan versus the interest charged on a payday loan.
The amount of money you need
If your emergency requirements are greater than an advance on your next paycheck will cover, then you need to consider a personal loan. Fast cash from a payday lender usually takes the form of an advance on your check, so they are limited to a percentage of your paycheck. The exact amount will vary from one lender to another
The time frame you need the money
Sometimes a need for emergency money is not for a single purpose, but represents several bills that you will need to pay, and much of this will be outside the framework of a couple of weeks. A personal loan will be paid in installments over a few months instead of weeks. This gives you the chance to borrow enough money the first time, and have the time to remedy your emergency financial issue.
The collateral you have to secure the loan
Although you can get an unsecured personal loan, if you own your car, you can get a title loan. This type of loan is an installment loan, but offers lower interest rates than a personal loan, because it is secured by your car. Of course, if you don't pay the money back, you will lose your car. You will not have this issue with a personal loan.
A personal loan offers many advantages over a quick loan from a payday lender. There are lower interest rates, higher loan amounts and installment payments available. After considering the information listed above, you may find a personal loan an attractive option for your emergency needs. For more information, talk to a professional like Union State Bank.
