January 22, 2012

In a previous post I mentioned a few different types of personal loans in the context in which they are best used.  In this post, I would like to revisit different types of personal loans.  I’ll leave it to the reader to determine which ones they might want to pursue obtaining.  In this post I will be discussing the details of the following types of personal loans: title loans, payday loans, and traditional bank loans.


Title Loans


Title loans are simply secured personal loans that are based on the value of your vehicle.  These are among the most expensive of the personal loans types.  Not only do they have high interest and fees, but also if you fail to make your payments you will lose your vehicle to the lender.  When getting a title loan, the lender usually lets you keep the keys to the car so that you may continue to use it.


Payday Loans


If any type of loan costs more than title loans it’s payday loans.  These loans cost more because they are unsecured personal loans. This means that lenders are lending you money without the use of collateral.  This means they incur heavy losses if you default on your loan.  Personal loans are often criticized because of how much they cost, especially since they are open to people with bad credit.  Personal loans can be obtained online and at brick-and-mortar stores across the country.  In some states, personal loans are either heavily restricted or banned altogether.  You must have proof of a job to get these personal loans.


Traditional Bank Loans

Traditional bank loans are personal loans you apply for at your bank.  These types of personal loans are hard to obtain for various reasons.  To get them, you need to have good credit, fill out paperwork, and tie the loan to some kind of collateral.  One example is a loan you get to purchase a vehicle.  One benefit to these loans is they tend have much lower costs than title loans or payday loans.


This concludes my post revisiting different types of personal loans.  Like always, feel free to contact us at DrCredit.com, or leave some feedback in the comments