Loans

Different Types Of Loans (US vs UK)

We take a look at some of the different types of loans available in the UK & US.

This article will show you that there are many loan options online.

Bear in mind that there is no single best method, as each method has its pros and cons and the right loan will depend on your circumstances.

If you are in an unmanageable amount of debt already you should speak to a debt advice charity such as Step Change before taking out a loan.

Debt Consolidation Loans

Debt consolidation loans can sometimes be suitable for people in debt, but as above you should consider speaking to a debt specialist first.

The idea behind debt consolidation loans is that you consolidate higher interest rate loans with a lower interest form of borrowing.

In theory you can use a personal loan or even a credit card with an introductory deal to consolidate your debts.

Online Personal Loan

A personal loan online can be secured or unsecured, but the most common type of loan is usually unsecured as there is no requirement for collateral.

The interest rate on a loan and whether or not you will be accepted is often determined by your credit score and the length of the repayment terms.

Online Payday Loans

Perhaps you need to pay an unexpected vet bill, repair a breakdown vehicle, or cater for an urgent or unexpected financial hardship. A solution that can help you is taking an online payday loan as it comes with fast approval and it is tailored to help in urgent situations.

An online payday loan is an amount of money borrowed, often at a high-interest rate with the agreement to pay it back on the next payday.  Lenders can also provide you with the opportunity to take out a payday loan online. Such a loan can also be termed as an online paycheck one.

Payday loans are not necessarily the best form of lending if you have other options available.

Online Cash Advance

Online cash advance loans are the same as the online payday loan as both are meant to be repaid quickly and on a short-termed agreement.

The difference is that an online paycheck loan is to be paid off with the next paycheck, while an online cash advance loan can take longer. An online cash advance can also be taken out when you are in an unexpected or urgent financial struggle.

Online Installment Loan

If you want to take a loan, either small or big, but you want to schedule out your repayment, most of online lenders provide you with an online installment loan lending option. You can use this lending option to schedule out your repayment over multiple periods of time.

Other Popular Lending Options

With this section, you will have a comprehensive overview of other popular lending options that you can use to get funds to finance any project you have in mind.

Peer-to-Peer (P2P) Lending

You can borrow money via a social media lending or a crowdfunding platform. This is where strangers are ready to borrow money or lend it.

Based on the borrower’s credibility, the lender can strike a deal. This is called the Peer-to-Peer Lending. It is a popular lending option people use.

Credit Unions

Credit unions are nonprofit cooperative firms. They are a group or community that are reputed for lending funds at a lower interest rate compared to that of the banks.

Financing Companies

Perhaps you want to borrow a huge amount of money with a longer repayment term, or you need money to purchase some expensive appliances. It’s time to visit financing companies. They offer such loans at competitive rates and the approval process is quite quick.

Banks

Banks can provide you with many types of loan like personal loans, consumer loans, mortgage loans and so on. It also involves paperwork and the lending bank can sell your debt to other banks or finance companies.

401(K) Loan

US Only: This is the last lending option a borrower should consider. Because the loan is taken directly from the borrower’s 401(k) account balance. A repayment plan is scheduled out based on the fund you took out, and its interest rate. The fund is paid back into the borrower’s 401(k) account using an automatic payroll deduction.

We hope you find this article useful!

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Poppy
About author

Poppy loves personal finance almost as much as she loves her two cats, Tif and Taz.
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