I went to
the emergency room last week, and wound up having to stay at the hospital
overnight. I don’t have insurance, so I walked away with an astronomical bill
that I can’t afford right now. I’ve decided that taking out a personal loan
will be my best course of action, but I know there are many types of loans to
help me understand the different types of personal loans?
hear about your emergency room visit. Many Americans don’t have insurance and
wind up with outrageously expensive hospital bills after receiving the medical
care they need.
Taking out a
personal loan to cover these costs is a risk, but it sounds like you’ve already
made your decision.
As for the
types of personal loans, you have a few options.
personal loan is the most popular type of loan among consumers. These come with
the benefit of not having to put up collateral, but the lack of collateral also
means that you’ll pay a higher interest rate.
loans can come in the form of a traditional bank loan or instant
loans online. You
receive one lump sum, and you’ll have a set payment every month for the term of
the loan. This is also known as an installment loan, and it offers predictable
drawback with this type of loan is that you need to have good credit to get
approved and receive a lower interest rate. There are options for people with
less-than-perfect credit, but you’ll pay more in the form of interest – which
translates to a higher monthly payment.
You can also
take out a secured loans, which is backed by collateral.
Mortgages and car loans are two types of secured loans. Most personal loans are
unsecured, but there are some banks and credit unions that will offer loans
backed by a savings account or CD.
these loans are backed by collateral, they come with the benefit of having
lower interest rates. But that lower rate comes at a higher risk to you. If you
default on the loan, you could lose your collateral to the bank.
loans – whether secured or unsecured – have fixed interest rates. This means
that your rate and monthly payments will remain steady over time. It’s easier
to budget for this type of loan because your payments are the same amount every
single month throughout the term of the loan. But because the lender is taking
on more risk, interest rates may be higher overall.
also loans with variable interest rates. This means that your rate can change
over the life of the loan, and it’s more commonly found with lines of credit.
With a line of credit, the lender approves you to borrow up to a certain
to a line of credit is that you’ll only pay interest on what you borrow, and
you can borrow only what you need. But if interest rates rise, your payments
will increase. Some lenders will also charge additional fees for this type of
know exactly how much your bill is, it makes more sense to take out a
fixed-rate loan for a specified amount.