Numerous borrowing options are available for consumers, although not everyone qualifies for each option. Lending products can be divided into distinct categories, although the terms may be quite different even within categories. Consumers can apply for credit cards with a revolving balance, short-term loans, and installment loans from companies like Blue Trust Loans.
When someone doesn’t pay off the entire balance of a credit card with each bill, this functions as a loan. It doesn’t matter whether the payment is due for a retail store card, a gas station card or a general credit card through any of the large financial institutions issuing them.
Most short-term loans are essentially cash advances on a paycheck. Sometimes employees can get these loans through their place of employment. This is especially the case if the employer has a credit union for the workers. Payday loans also are cash advances that are required to be paid back, with interest, by the next paycheck date.
The exception to this is the pawn loan, which is a short-term loan that requires collateral. People can pawn jewelry, electronics, firearms and other valuable items for cash. Usually the entire amount plus interest is due at the 30-day mark, although the customer can refinance the loan by just paying the interest.
Installment loans come in a wide variety. Some require collateral and some do not. A mortgage and a home equity loan are installment loans on real estate, for example. Car title loans also are installment borrowing opportunities that use the vehicle’s title as collateral. If customers default on these loans, they risk losing their home, other real estate, or personal vehicle. Some retail stores also offer financing for purchases like furniture and tires. The amount is usually paid off within three to six months.
Unsecured installment borrowing options are personal loans that do not require collateral and can be used for any purpose. They are available from banks, credit unions and general financing companies. People can apply for the loans online or at brick-and-mortar stores. Some financing companies provide loans to customers with problem credit, although the interest rates are higher.