Knowledge About Loans And Debt. Know more before you need more.

Loan-Students.com is a website dedicated to helping arm people with knowledge about loans and debt. As common as it is in our society to use loans, mortgages, credit cards, and other types of financial resources, we haven't put enough emphasis on educating how these tools should be used properly.

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These days, there may be times when you need to borrow money. It could be for an emergency or to make a large purchase.

There are a few options to borrow money, and each of them have positives and negatives associated with them.

It is important to understand the details and terms of the agreement you are making and to be sure you’ll be able to make the payments.

If you don’t keep on top of the repaying the loan in the agreed terms, you could end up with unmanageable debt, loss of property, and negatively impact your credit score.

1. Secured personal loans
To obtain a secured personal loan, you'll need collateral, like a vehicle or certificate of deposit, to “secure” your loan with the lender.

Best for lower interest rates
It's all about making it less risky for the lender. Because of this, secured personal loans often come with lower interest rates than unsecured personal loans. That’s because the lender may consider a secured loan to be less risky — the collateral is an asset backing up your loan. If you don’t mind risking your collateral and you’re confident you can pay back your loan, a secured loan may help you save money on the amount of interest you'd pay.

Don't lose your Assets
When you use your property as collateral to take out a loan, you run the risk of losing the it. For example, if you default on your personal loan payments, the lender can seize your car or savings for not holding up your end of the agreement.

2. Unsecured personal loans
Personal loans are used for a variety of reasons, from paying for home improvement expenses to consolidating debt. Personal loans can be unsecured loans, which means you’re not putting up property as collateral. It also means your property isn't as risk in case you default on your loan.

Best for debt consolidation and big purchases
If you have high-interest debt, like credit cards, a personal loan may help you pay off that debt sooner. To consolidate your debt with a personal loan, you’d apply for a loan in the amount you owe on your credit cards. Then, if you’re approved for the full amount, you’d use the loan proceeds to pay your credit cards off. Now you make one payment on the loan, at a lower interest rate, than payments on multiple, high-interest, credit cards.

Usually, depending on your credit, a personal loan may offer a lower interest rate than your credit card — and a lower interest rate can mean big savings. Try to get an idea of what the average debt consolidation rate is.

A personal loan may also be useful if you want to finance a big purchase, like a home improvement project, or you have other big costs like medical bills or moving expenses.

Check your eligibility for an unsecured personal loan even if you have fair or bad credit. But you may want to shop around to make sure the interest rate and monthly payment is good for your budget.

3. Payday loans
Payday loans are short-term, high-cost loans. States regulate payday lenders differently, which means your available loan amount, loan fees and the time you have to repay may vary based on where you live.

Best for emergency cash when you don’t have other options
Payday loans are usually $500 or less. Getting a payday loan may be helpful if you’re in a pinch and don’t have savings or access to cheaper forms of credit.

Watch out for high fees
Payday loans have high interest fees that can equate to annual percentage rates, or APRs, of around 400% — much higher than personal loan APRs, which average around 10% to 11% for a 24-month term, according to the Federal Reserve. Many states have special regulations for these lenders, or ban them all together.

4. Title loans
If you own your vehicle, you may be able to take out a car title loan. You can typically borrow between 25% and 50% of your vehicle’s value. Title loan amounts often range from $100 to $5,500. This is according to the Federal Trade Commission. These loans have their own risks. You’ll usually have to repay your title loan within 15 to 30 days. If you don’t, your car could be repossessed.

Title loans typically carry very high APRs in the triple digits. Upon approval, you’ll have to hand over your car title until you pay back the full amount of the loan, including fees.

5. Pawn shop loans
A pawn shop loan is another option for fast-cash borrowing. Pawn shops have been around a long time. You’ll take an item of value, like a piece of jewelry or valuable electronics into a pawn shop and borrow money based on the item’s value.

Loan terms vary based on the pawn shop, and interest rates can be high. Some states have stepped in to regulate the industry. Plus, you usually won’t get your pawned item back until you pay back the loan in full, and the amount of time you have to pay it back is different in each state.

6. Payday alternative loans
Some federal credit unions offer this payday alternative loan. A PAL is designed to be more affordable than a payday loan. Payday alternative loan amounts range from $200 to $1,000, and typically have longer repayment terms than payday loans. They're usually one to six months instead of the typical few weeks you get with a payday loan.

7. Home equity loans (HELOC)
A home equity loan is a type of secured loan that uses your home as collateral to borrow a lump sum of money. The amount you can borrow is based on the equity you have in your home, or the difference between your home’s market value and how much you owe on the mortgage. Usually, you can’t borrow more than 85% of the equity you have in your home.

8. Credit card cash advances
Your credit card may offer a cash advance option. This is a short-term loan that you borrow against your card’s available balance.

Best for paying cash
Not all businesses accept credit cards, so this can help you get some quick cash, in hand.

Watch out for fees and high interest