We already know that in this world you need money to survive. You need money to do just about anything actually. The economy is down and you’ll see a lot of  people trying to get loans just to help them take care of their basic needs. Everyone has bills they need to pay, so we are here to help you find a way to do that by getting a loan. You need to understand the different types of loans so you make no mistake in taking one that you can not afford to pay back. You need to be careful in choosing.

There are two types of loans, secured and unsecured loans. Secured loans ask you to provide collateral to a loan company; if you don’t pay them back they keep the items you offered up for collateral. This could be your car, house, personal items and much more. This is not suggested for those who have no intentions or don’t have the ability to pay the loan back accordingly. You can lose everything you ever worked for in your life with this loan if you choose to not go about it in the right way.

Then on the other hand there are unsecured loans which you can only get if you have nothing to offer as a guarantee that you will pay them back. You will have to pay a much higher interest rate than a secured loan because the lender is taking a risk relying on your word, credit history and making a judgment on whether or not you can pay back the loan. These loans if left unpaid cause your credit score to drop dramatically and you’ll receive phone calls from collection agencies. You want to pay these back yourself or go through a debt consolidation firm to help cover the costs of these.

A warning to you would be, never take out a loan that you know you can not pay back. Don’t overdo the amount you take out because you want to pay everything off all at once, because you will have to pay that loan back just like you took it out. Your amounts will be higher and your interest rates will soar through the roof. You might want to look into taking out a few small loans. That way you can pay them each off with small payments and don’t have to risk having your assets liquidated or bankruptcy.

If you happen to file for bankruptcy you will have to wait a minimum of 5 years until you can even have credit again. This is a long time to wait, and looking at the economy credit is really needed right now. Find the loan that’s right for you, make a payment plan, and stick to it. You can fight your way out of debt easier this way. Good luck!

By Jasmina