7 Alternatives to Personal Loans

Whether you need money for a new kitchen or you are looking for a debt restructuring loan, you will also be faced with personal credit. At first glance, it all seems like just another label for a traditional installment loan. However, a personal loan is not always the best way out of the situation. Today it is essential to know what loan alternatives are.

Credit card

A credit card is one of the most prominent credit alternatives. It is a payment instrument that allows you to use bank money under certain conditions. The holder must make the minimum payment on time or fully pay off the debt of the grace period, if any, and remember the requirements for transferring to cards of individuals and withdrawing cash. But at the same time, he receives several alternative credit card advantages:

  • Round-the-clock access to funds. Regardless of the time of day, you always have access to the amount to purchase without leaving your home.

  • Card processing speed. Competing with each other, banks try to attract customers through quick card processing and a minimal package of documents.

  • Safety and comfort. The risk of meeting a fraudster lies in waiting in the subway and bus, at the crossing, and even in the store. If the card is lost or stolen, it is easy to block it by calling the bank's hotline.

  • Cost control. It is not always possible to remember where and when the cash was spent. You can monitor and plan your monthly expenses by requesting a card statement.

A quick way to get cash for withdrawal is to apply for a credit card online. This process takes up to 15 minutes. You must choose a credit card that meets all the conditions and fill out an online application.

Salary advance

A fantastic substitute for a personal loan is an arrangement with your company to get some or all of your upcoming wages in advance. You can arrange to receive some money in advance if your company provides this choice.

Personal credit line

There are the best options for personal loans. A credit line is a particular type of bank loan for citizens and businesses: legal entities and individual entrepreneurs. The peculiarity of this loan is that the client can receive money several times exactly when he needs it most. For this, you do not have to draw up documents every time. Having drawn up an agreement once, you can count on a revolving loan.

Benefits of these alternative personal loans range:

  • You save time on paperwork. No need to prove solvency and sign an agreement every time you need a loan.

  • You manage overpayments. You take only the amount you need from the line limit and then pay interest only on it.

  • Flexible terms are available to you. The amount of the tranche and the repayment period is linked.

The main disadvantage: The bank considers applications for a credit line longer than for non-traditional personal loans. It needs to assess the prospects for the development of your business, especially if you are an individual entrepreneur or recently registered.

401(k) loan

You can take out a loan from a retirement plan supported by your company. In contrast to personal loans, 401(k) loans do not need you to apply and accompanying documentation, and there are no minimum credit score restrictions. They are, therefore, perfect for customers who don't fulfill the standard lending institution's credit requirements.

Peer-to-Peer Loan

One of the alternatives to personal loans is peer-to-peer lending. It allows individual borrowers to receive loans directly from individual investors. It is an alternative to traditional sources of lending and credit, such as banks and credit unions.

Borrowers can avoid the hoops and hurdles associated with banks. Five forms of ID in triplicate, notarized, and a pint of blood are requirements of the past. Instead, standard transparency and simplified forms are the P2P norms.

Borrowers can also waive many of the usual restrictions banks place on them. You can now avoid showing profits, three years of tax returns, and other requirements that often punish new businesses.

Peer-to-peer lending comes with all the usual borrowing and lending risks, but these risks are heightened. The bank doesn't pay you much for your savings account because this is a reasonably low-risk system. Watch this video to learn more about this type of loan https://www.youtube.com/watch?v=DigX5s8Eifc.

Home secured loan

One of the other personal loan alternatives is a home-secured loan. The popularity of lending secured by an apartment or house is growing yearly. It is due to several tangible benefits of this service:

  • The possibility of obtaining a large amount will depend on the housing market value and its owner's solvency.

  • A fairly low-interest rate — the guarantee of a bank or other financial organization is the client's collateral. Thanks to this, the lender does not need to enter into agreements with high-interest rates.

  • Loan repayment terms — often, a loan secured by real estate is repaid over 5-10 years.

Like any other type of lending, a mortgage loan has its drawbacks. These include a high risk of property loss. Regular loan defaults give the bank the right to go to court and put the property up for auction.

Loan to a small company

There are several financing options available to company owners. Small business loans frequently pay for company expenditures, whereas personal loans are used to support individual needs. The benefit is that unconventional personal loans frequently have lower interest rates than consumer loans.

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