While unsecured loans may offer some borrowers financial relief, it’s not a one size fits all solution. If you’re unsure if an unsecured loan is the best financial choice for you, you may want to consider a few alternative options.
Personal line of credit:
A personal line of credit is a type of revolving credit account that allows you to borrow a sum of money (up to a certain amount) and pay it off over time. Unlike a loan, you do not have to borrow the entire lump sum all at once. You can choose how much you want to borrow at a given time and interest will only be charged on the amount of money you borrow. A personal line of credit does not come with fixed rates like personal loans do, so your payments may vary month to month.
0% intro APR credit cards:
Typically, when you use a credit card, if you don’t pay off the balance before the payment due date arrives, you’ll have to pay interest. However, some companies offer 0% intro credit card promotions to help borrowers get around that. With this approach, customers can avoid paying interest on their purchases even when the payment due date arrives. However, the 0% APR generally only lasts for a certain period of time and can last anywhere from 12 to 21 months.
Home equity line of credit:
Like a personal line of credit, a home equity line of credit (HELOC) is also a type of credit account that revolves. The difference is, a HELOC is dependent on the borrower’s home equity. When you buy a house, over time, as you pay it off, you’ll garner equity. With a HELOC, you can borrow against that equity up to a determined amount. Like a personal line of credit, a HELOC typically does not come with fixed rates. Instead, these rates tend to rise and fall with the financial market.