Borrowing money is quite common in the USA. In fact, tens of millions of Americans borrow money and take out loans every year. There are many reasons that people need to borrow money, from paying for emergencies to making large purchases and anything in between.
While most people opt for a standard unsecured personal loan, that isn’t the only option. There are many different borrowing options for most people that are worth exploring. Without any further ado, let’s take a closer look at 3 popular and common alternatives to a standard personal loan.
If you need some quick cash and own your car outright, consider using title loans. A title loan is when you utilize the title of your car to borrow money. By putting up your title as collateral, lenders will let you borrow some money. The amount you can borrow will vary depending on the lender and the value of your vehicle. The more value your vehicle has, the more you will be able to borrow.
They are normally for a few hundred dollars, up to a few thousand dollars. Title loans often need to be paid back within a few weeks or a month, depending on the terms of your loan agreement. These loans can be great for those who might struggle with a low or bad credit score, as many companies that offer title loans don’t check credit. And if they do, many are willing to work with those who have all different types of credit.
Of course, when you take out a title loan, you need to be careful. Missing your payments could lead to you losing your car. Also, many of these loans have relatively high-interest rates, so take that into account as well.
Home Equity Loans
Instead of using your car to borrow money, a home equity loan uses your home as collateral. The amount you are permitted to borrow in most cases will depend on how much equity you have in the home. This is the amount between how much you owe on the home, and the value it has on the open market. While you likely can’t borrow the full amount of your equity, many lenders will allow you to borrow quite a bit.
Interest rates on home equity loans are often lower as there is less risk for the lender. This means they are a good substitute for those who can’t get a standard unsecured personal loan. Before you get a home equity loan, be sure that you can afford the payments. If not, you could end up losing your home if you default on the mortgage and can’t pay back the loan.
Credit Card Cash Advances
While these aren’t always an option, you may be able to get a cash advance on your credit card. Essentially, it is borrowing cash against the balance of your card. Of course, you can just use your credit card in most cases, but if you need cash for something, this can be a decent solution.
However, it is important to know the interest rate that you get with this cash advance. Many people think that the interest rate you get will simply be the same as your regular credit, but that isn’t always the case. Be sure to find that information out so you know how much you will need to pay in fees and interest over time.
In conclusion, these three alternatives are great for those who can’t qualify for a standard personal loan or want some different options. Whatever method you choose, be sure that you can afford the interest rate and the loan is within your budget.