Know the Right Loan For Your Specific Needs

02/14/2011

loansIf you are like many people, there comes a time in life when you feel that the financial choices you are supposed to make requires you to have a PhD or an advanced degree in order to fully comprehend and make the right and informed decision. Do I sign this lease? Do I pay this bill? Do I buy this item now and pay for it later or do I pay for it now and buy it later? These are some of the questions that regular people like you have to try and decipher and understand the ramifications of each decision.

Sadly, such decisions, together with their ramifications are so complex to fully comprehend. As if that is not enough, there is a very wide gamut of financial weapons you are expected to add to your financial management arsenal that you are left all the more confused. With that said, insurance and investments are two good things that you should have and to some people, their financial decision is to take a loan. If you fall in the latter category, here is a list of loans that you can consider adding in your financial management portfolio.

Loans are categorized into two – secured and unsecured loans. Secured loans are the types of loans that expect you to have collateral, a guarantee in form of assets to assure the lender that in the event you fail to pay back the loan, they will take the collateral and recoup their losses. Unsecured loans on the other hand are the direct opposite of secured loans; they don’t need any form of collateral. In most cases, people are advised to take secured loans, unless otherwise.

The kind of secured loan that you should take will be determined by your current financial status. For instance, a debt consolidation or a bad credit loan will be ideal if your current debts are un manageable. Say you have credit card debts, bills, loans etc. A debt consolidation loan will help you consolidate all your outstanding debts under a single umbrella thus giving you a single monthly remittance, reduced rate of interest, and an extended term of repay.

House improvement loan is the other category of secured loans you might want to consider. As the name may suggest, the loans is meant to help home owners leverage their borrowing for the sole purpose of increasing their investment in their house. Once you get a house improvement loan and fix up your home, the value starts appreciating and when you decide to sell the house, the value will be so much than the initial investment that you made.

It is normal to wonder why you should borrow money in the first place and then pay it back for the purpose of improving the value of your home but the truth is, this is not a zero sum equation. This is because the house will increase in value at a rapid rate than your initial investment of improving it. Talk of leverage.

Lastly, there are other general kinds of loans that you might want to consider also — loans that will help you pay for day to day things you might want to buy or pay for but lack the financial backing. For instance, you might want to pay for a vacation, purchase a fancy sports car, or offset an emergency. Whatever the case, using a secured loan will help you get it at the most reasonable rate and repayment terms due to the collateral.

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