I would like to think that all of my readers are in relatively good shape financially. The fact that you’re surfing the internet to improve your financial acumen already gives you a sense of savvy.
But what if you’re different from my typical reader? What if you don’t have to contemplate What To Do With An Old 401(k)? Here is some advice for you.
First off, be honest with yourself about where you are financially. If a bank statement comes and you purposefully leave it on the counter because you’re afraid of what’s inside, stop. Seek help.
If you’re thinking of getting a payday loan, I like that you are seeking help but look somewhere else. There are other options out there. The option I’m thinking of is a personal loan. Ideally, I would feel most comfortable with this personal loan coming from a bank. Here is why:
5 Things You Didn’t Know About Unsecured Loans
1. It’s Instant Money
With many loans, the approval process is typically drawn out. Someone will collect your information, put it into an application, and then an underwriter will ultimately decision the loan. This is usually just the beginning before income verification, collateral appraisal, etc. take place. With the unsecured loan, the process is simple. Remember, unsecured means there is no collateral.
2. It’s An Installment Loan
As much as I love credit cards, they can potentially be dangerous. Without a structured plan to repay the principal, the balance could never go down and you pay on the credit card for years. With the unsecured loan offering terms of 1-7 years, you know exactly when you’ll have it paid off.
3. There Is No Prepayment Penalty
If for whatever reason your situation changes, it’s not a big deal. Just repay the money you received and you’re back to where you started.
Again, credit cards are a fantastic source of spending and short-term borrowing. But what do you do if it’s not a bill you have to pay but instead you owe money to your drug dealer? I highly doubt your supplier of booger sugar accepts credit cards. No one will question why you need the money or what it’s going towards.
5. The Interest Rate Is Relatively Low
I say relatively because I’m assuming the alternative is a high-interest credit card (20+%) or ridiculous fees charged by whomever you owe.
I want to reiterate that an unsecured loan is certainly not something I would advise for everybody. In a perfect personal finance world, everybody would have 6-12 months saved up in an emergency fund. However, let’s be honest – sometimes stuff happens that we do not plan for and therefore are not prepared for. If you’re ever in this situation, don’t be so quick to look passed all the loans that are available.