Are Unsecured Loans Better than Payday Loans?

In these times of economic duress more and more people are finding themselves in a financial bind. Not everyone can afford the rising prices of seemingly everything in the economy these days. If you have found yourself in a hard way financially, then a personal loan just might be a good option for you to consider. Are unsecured loans better than payday loans? There are varying opinions on this question. Let’s take a look at some of the benefits and downfalls of both.

Should you use secured or unsecured?

With personal loans you have the option of taking one out either in a secure or unsecured manner. Both ways have their advantages and their disadvantages. With a secured loan you are required to put up some collateral on the money you are borrowing. These types of loans are better if you are planning on borrowing large amounts of money. Most people put up their vehicles or their homes as collateral when they borrow a secured loan. The total amount that you will be able to borrow with secured loans equals the amount that your collateral is worth. One of the best things about secured loan is that you will have the benefit of lower interest rates. This helps you out very significantly when it comes time to pay the amount of the loan back. As well as lowered interest rates some of the other advantages of secured loans are larger amounts that you will be able to borrow, you will have a longer time in which to repay and you will certainly have more flexible terms and rates. For example with secure personal loans you may possibly have as much as 5 to 30 years to repay.

Unsecured Loans

Unsecured loans are meant for people who only intend on borrowing a small amount of money for a shorter period of time. Since the lenders of these types of loans do not require collateral, your “collateral” is essentially the fact that you hold down a steady job and receive a paycheck. Unsecured loans have much higher interest rates to them because of the fact you aren’t required to put up any collateral .There are many lenders online who provide unsecured loans though and you should be able to find a lender with comparable rates. With traditional loans you are usually required to have good credit. But with bad credit payday loans you can still borrow money even if your credit history is bad and you have a less than perfect credit score.

Weigh Your Options Carefully

Secured and unsecured loans can both be extremely beneficial, especially when you have payments due and you can foresee no other way to make the payments. You should weigh both sides of the coin so to speak and decide which loan type is best for you. You can go online and find many lenders that are ready and willing to help you. Be sure to explore all of your choices carefully and make an informed decision that will best suit your financial needs.