There are many reasons why you may need to secure a personal loan. You can use one to pay off bills, go on a vacation, buy necessary medication, or fund your children’s education. The list of reasons why you might need a loan is long. Personal loans are usually unsecured loans that typically do not require collateral and security, making them easier for the average consumer to get. However, some loans may require collateral from the customer along with a good credit score.
Many personal loans are smaller than others, such as home and auto loans. Their interest rates may be higher as well, but you’ll be approved for one easier if your credit is poor. It is important to remember that defaulting on personal loans can reflect poorly on your credit report, so always make sure you only take out what you can afford to pay back.
Here are a few different types of personal loans to consider when you need money:
1. Payday Loans
If you have poor credit and aren’t able to get a bank loan, payday loans may be the answer. These types of personal loans allow you to borrow money as long as you have some form of steady income, a checking account, and a government-issued ID. A payday loan company will look at how much you make per pay period and base the loan amount off of that. You’ll be required to repay the amount, plus fees, on your next payday.