Alternatives to High Cost Loans

Alternatives to High Cost Loans

The fact is that when you borrow money it will cost money, but it doesn’t have to cost a lot.

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With a loan it is important to manage the interest rate and the processing fees.

There are less expensive ways to get the money that you need. When you lower the cost of borrowing then the payments you make will go further in reducing your debt.

Signature Loans

A personal loan is a traditional loan that you are able to get from a bank or from a credit union. This type of loan is usually cheaper then a payday loan, title loan and a credit card.

A personal loan usually has a low interest rate that is often fixed for the period of the loan.

The processing fess should also be low.

With a personal loan you receive a lump sum of money that is enough for you to do what you need to do. You will then need to make your repayments every month until the loan is paid off.

A part of your monthly payment will go towards reducing the principal amount and the other part will cover the interest.

Person-to-Person Loans

This is a variation of a personal loan where you will borrow money from individuals instead of a bank.

The individuals could be people that you know or complete strangers who are willing to lend you money over a P2P website.

If you have poor credit or irregular income then you might find it easier to qualify for this type of loan, but you must make sure you can repay the loan.

Everything about the loan and its terms should be in writing especially with friends and family and larger loans can be secured with a lien.

Balance Transfers

If you have good credit then you might be able to borrow at a low rate for a period of time and take advantage of balance transfer offers.

You may find that you will have to open a new credit card account for this or you could get convenience checks from your existing account.

A balance transfer can work if you know that the loan will be short. This will work if you pay the full amount before the promotional period ends, otherwise you will be looking at paying high interest rates.

Home Equity

If your home has plenty of equity then you can see if you are able to borrow against it. A second mortgage usually has low interest rates, however you do risk your home by doing this if you can’t keep up with the payments.

Smaller Institutions

Smaller banks and credit unions will still look at your income and credit, but they might be more flexible than bigger banks.

Pledge Collateral

If you have assets you might be able to use these as collateral in order to get a loan. You should first try banks and credit unions before going to storefront financing.

Partnering Up

You might be able to qualify with the help of a co-signer. If you know someone that has good credit and a fair income then lenders will use their information to approve the loan. If you fail though on the repayments then the co-signer will have to pay.

If you are in need of a personal loan, then head to FinanceMan.

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