Financial emergencies are usually sudden and expected. Individuals may need to obtain a cash loan to respond to these emergencies. There are various types of loans with differing interest rates available depending on one’s credit history.
This type of cash loan involves smaller amounts of cash. It may help a borrower with urgent medical bills, tuition fees, Christmas gifts, and home repair bills. It is a short-term loan normally returned after one receives their monthly paycheck. Payday loans are appealing because they do not involve a tremendous amount of paperwork. Borrowers can apply for one online or visit a private lending store.
Cash Advance Loans
An emergency cash loan or a cash advance loan is meant to help borrowers with immediate and urgent expenses. They can be obtained online or from agencies. The interest is usually high and will require proof of stable employment and remuneration. However, they do not come with a background check and approval is quick.
The borrower puts down an asset like their home, cars, antiques, or jewelry as collateral. In case they are unable to repay the loan on time, the lender can take the provided assets as a form of repayment. Secured loans have low interest rates as the lender faces reduced risk of nonpayment.
With this type of cash loan, the lender takes the borrower’s word without any guarantee or collateral. Because of the large risk this poses for the lender, this type of loan is only approved if the borrower has a good credit history
It usually involves loans in small amounts, higher interest rates, and restrictive terms and conditions. Credit history plays a massive role in the approval of such type of loan.
College education involves expenses including tuition, books, accommodation, and other living costs. Students usually have to take out loans to cover these costs.
A student is usually able to borrow large loan amounts while they are studying and return them after graduation or when they have a job. Interest is offered at a low rate and can be repaid over several years. They are easily approved and offered on good rates. However, the lender will still take the student’s credit history into consideration.
Bad Credit Loans
This type of cash loan is offered to those with a bad credit history and low scores. As banks usually turn down the requests of these borrowers, loans can be obtained from specialized institutions or private lenders. A poor credit score normally involves high interest rates and fees for the buyer. If they are able to successfully follow the terms of the loan, their credit score will improve marginally.
There are generally three types of lenders who offer bad credit loans. The payday loan lender considers how steady an individual’s income is. A hard moneylender offers loans with collateral. And a private moneylender offers unsecured loans with high interest rates for those with poor credit scores.
Loan approval and interest rates largely depend on credit score and financial standing. It’s important to know the type of loans available in case of an emergency.