! ! All About Loans: What Loan is Right for Me

Unsecured Loans
These loans do not require any collateral and do not require you to withdraw the entire balance at the initial signing which means you are only paying interest on what you use. Since you are not using any collateral your interest rate will be higher than a secured loan.

Credit Card
This is the most common loan, you purchase everything on it than pay it off the next month. Only a minimum balance payment is required, but the remaining balance will be charged a very high interest rate usually 19.9% at the very minimum. A good rule of thumb is not to spend on your credit card what you could buy with cash.

Lines of Credit
A very underrated and under appreciated loan. If you have a reasonable credit score you will be eligible for a line of credit from your bank. This is a loan that is available for a certain amount, but you do not have to use the entire amount available. You should see if you are eligible at your bank because the interest rate is much lower than a credit card usually 3-8%. Of course your rate will be relative to your credit history. You can use this loan to pay off your bills and credit cards, but at a much lower rate if you find yourself having credit card debt for daily spending.

Overdraft Protection
This is essentially a loan to you if you happen to overdraft your account. I would strongly recommend against this protection if you are eligible for a line of credit. First you have to pay a monthly fee regardless if you use the service or not. Second you will still have to pay a much higher interest rate if you do end over drafting in addition to a fee each time. Get a line of credit and move money into your spending account and you will never over draft and it will be a much lower cost.

Standard Demand Loan
This is a very common loan where you go to the bank and they can quickly see based on your history what you are eligible for. The interest rate will be higher than a secured loan and relative to a line of credit depending how long you have to pay it off and how much it is. The one risk with this loan is the bank can call in the loan at anytime, which means you have to pay it off immediately at the banks desire.