Types of Loans You Can Use Now
Types of Loans that can help with your finances
If you’ve been living payday to payday and just scraping by, or you just don’t have enough income to save for an emergency fund, taking out another loan that will push you further from the financial independence that you’re striving for is probably the very last thing on your mind. Understanding the different types of loans will help you choose the right one for you.
However, taking out the right loan, as part of a thoughtful financial strategy to improve your overall financial situation, can help you to reach your broader financial and life goals.
Whether you’re studying, investing in a home to build your personal wealth, or you want the peace of mind of a stable emergency savings fund, the right loan could help you to move towards a goal you’ve found impossible so far.
You could lower your monthly payment to free up your budget for other costs, pay off any debt you have faster, or step away from revolving debt into a manageable installment loan that will allow you to move forwards.
The loan that is right for you will depend on your exact personal situation, but whatever your goals are, you’ll find there are ways that you can reach them
Some of the types of loans you might consider are:
Modifying debt into a personal loan
If you’ve more than one payment that you have to make each month, it’s going to be easier to budget correctly when all of your payments are combined into the one place.
Usually personal loans will come with a lower interest rate than any credit card debt that you might have.
There are 2 other advantages of a personal loan over a credit card:
- Pay off debt faster – instead of paying the minimum balance each month, with a personal loan you’ll choose a repayment plan that fits into your budget, helping you to reduce the amount of debt that you’re carrying.
- Improving your credit score – a personal loan brings your credit score up by preventing you from carrying an ongoing rolling debt, to a set amount that decreases over time. It’s a much better solution in the long term, and removes the temptation to use as much of the total credit limit that your card comes with too.
Refinance your mortgage
When the market rates are low, it can be a good time to refinance your existing mortgage. If you’ve had your mortgage with the same bank for a long time, you can now take advantages of new loans, lenders, and the increased competition in the mortgage market in recent years that’s forcing the big banks to adjust their products and processes.
Find out if you can get a better deal for the remainder of the life of your mortgage. Lower monthly repayments could help you to save or fund other personal goals that you have.
If you’re looking to save in total lifetime interest over your mortgage, you might refinance to a shorter term to pay off your home faster.
Another popular mortgage refinance option is to take cash out for some reason, such as for renovations, or to fund your children’s education. This type of refinance allows you to convert your property equity into cash, but remember, you’ll still need to repay it.
Personal or Car Loan
When you’re just starting out in your career, you often find yourself living payday to payday as you’re starting at the bottom rung of the ladder. To succeed in your job, reliable transport is absolutely essential.
If you’ve just started your working life, or you’re starting your own business, your credit history might not be very long. This can make it more difficult to get a loan to buy a car. There are lenders who understand that you need a helping hand at the start though, and with the right advice you can source a personal loan to buy an older car, or a secured car loan.
This will mean that you can be on time to work every time, meet your career goals and start to build a strong financial profile for the future.
Don’t get discouraged
While you might not be eligible for the lowest advertised rate, or the higher loan amount you’d like, with the right forward planning you can improve your ability to obtain ideal finance.
The best thing you can do to improve your financial situation is to never stop learning. Make sure that you understand your finances, and your debt, and make the commitment to pay off your debts. The short term sacrifice will only be a long term gain.
Keep your oldest line of credit open if you’re consolidating debts into a personal loan or into your mortgage. This will help your credit score. Make sure that you meet every repayment on time too, as is the most important part of retaining good credit.
If you can, try to keep your credit utilization under 30%, as this reflects well on your credit profile too.
If you’re still not sure what to do about your finances, seek some free financial advice, or find out what types of loans can help you better financial future today.