So many of us find ourselves in tight spots where we need a little extra cash to help us get by. Maybe the car you drive to work broke down, your child has unexpected medical bills or back-to-school expenses, or your job was furloughed and you need some money while looking for more work.
When you need cash quickly, a great option is taking out a personal loan. There are two main types of personal loans: secured and unsecured. Secured loans are tied to an asset used as collateral. One example is a pawn shop—you offer something valuable in return for fast cash. Another popular secured loan is a title loan, which may use your car title or another asset as collateral in case you default on the loan.
Many people prefer unsecured loans because they don’t require you to put anything on the line—they just offer you a quick and reliable way to get cash.
If you need a personal loan, it helps to understand the terminology that describes what kind of loan you’re getting. Let’s explore five types of cash loans and how they compare.
1. Personal Loans
These types of loans are any loans that you can borrow for a personal reason—such as paying for an emergency expense. You don’t have to justify how you’ll use the money; the only things off limits include buying a car or making a downpayment on a house with the loan.
Most personal loans are unsecured, but some banks and credit unions do offer secured personal loan options. Some personal loans are online loans—which means you can apply from an online lender without stepping foot in a bank. When applying, you may need to provide proof of income or go through a credit check. Personal loans can be for several hundred dollars up to a thousand or more.
2. Short-Term Loans
Short-term loans are a type of personal loan. Some lenders give you years to pay back your personal loan. A short-term loan, on the other hand, is paid back over a few months but in less than one year. Paying a loan back fast can get the debt payments and interest costs over with while getting you the cash you need right now.
3. Payday Loans
Payday loans are an example of a short-term loan. This is basically a loan against your next paycheck—you know money is coming, but you need it now. Payday loans are usually for $500 or less. With payday loans, your payment is due all at once, as soon as you get your paycheck. Payday loans carry heavy fees, especially if you fail to pay them back when they are due. You can apply for a payday loan at lenders that specialize in these types of lending. Power Finance Texas does not offer payday loans.
4. Installment Loans
Installment loans are paid off in installments, such as a monthly payment, rather than all at once. Breaking the debt down into manageable, regular payments is helpful to a lot of people who have a steady income but need quick access to cash. You can pay this loan back slowly, over time, with interest.
Most personal loans are installment loans, with the exception of the payday loan. You can apply for installment loans at banks, credit unions, and online loan lenders.
5. Cash Advance Loans
A cash advance loan can mean two different types of loans. The first is withdrawing cash at an ATM using your credit card. While this can be a good way to get instant cash, it carries heavy fees. The other type of cash advance loan is a personal loan from a cash advance lender. The first type requires that you have an existing credit card, but to get the second type, you don’t need any relationship with the lender.
There are many types of cash loans, and sometimes one loan may fall into more than one category. For example, a personal loan may also be a short-term loan and an installment loan, but not a payday loan. Some loans are best for emergency expenses, such as cash advance and payday loans, while other personal loans and installment loans can be used to fund things like a home renovation or Christmas presents.
What is the easiest loan to get approved for? It depends. Payday loans and credit card cash advance loans don’t require a credit check, but they do carry heavy fees. Personal loans are simple to apply for—you can often just apply online—but many do require a credit history check and may offer different terms and interest rates based on your credit score.
Do you need cash now? Apply for a personal loan from Power Finance Texas.