At one point or another, almost all of us find ourselves searching for a loan. Whether it’s to buy your first house, a loan for a new car, or a short term loan to tide you over for a few weeks, or because of a hidden expense, loans can help us get to where we need to get. Depending on what you need your loan for, there are a few different types of loans you might want to consider. Here is an introduction to some of the main types of loans and which will work best for you:

1. Short Term Loans
If you just need a few hundred pounds for an unexpected expense or to tide you over until your next payday, then this might be the best type of loan for you. Many loans from banks require a lot of paperwork and jumping through a lot of hoops, and if you’re short on time or needing the cash urgently then those more traditional loans wont work for you. If you want to take out a loan that could be in your bank within hours, then short term loans are the best option for you. Just be sure to read the terms of the loan so you understand the repayment plan and avoid any additional costs.

2. Car Financing Loans
You can choose a few avenues for getting a car loan – either directly through a bank, or directly through the car sales place. The pros and cons will depend on the specific banks and agencies, but you’ll find that some car agencies offer some special perks that make it better to go through them. For example you’re going to want to see who if they will cover car insurance for the car until the loan has been paid off, saving you some extra costs. It can be a good idea to get a quote from each to see what’s included and to look beyond the insurance rates.

3. Mortgages
If you’re someone who has less than perfect credit, you might struggle to get a home loan. If that’s you, don’t give up you still have a few options. I would look to private lending companies, as well as talking directly with a mortgage broker. I like working with brokers because it’s in their best interest to find you a good deal, so they will hustle in order to find something that works for you. Be sure to check through the repayments to ensure you can afford them, you ideally want to spend less than 25% of your take home pay on repayments.

4. Credit Cards
If you need a loan for something quick and can get it paid back before your next repayment date, putting it on the credit card can be a good option. Obviously how much you can put on your card will depend on your allowance, but I use my credit card often when I need to grab something but know I can get it paid next pay cheque. Credit cards usually have much higher rates than other loan types, so are best used for things you can pay back really quickly.

Hopefully this introduction to some of the main loan types give you a little bit of clarity as to how to move forward with your next loan. Please let me know if you have any questions in the comments below!