|
PERSONAL LOANS: LUMP SUMS OR LINE OF CREDIT?
When you
apply for an unsecured personal loan, you
have the option of obtaining your cash in one lump sum,
or as a revolving line of credit.
Lump sums
More commonly known as closed-end loans, lump sum loans
have fixed interest rates. The term you receive for a
lump sum loan is going to depend on what kind of credit
you have. The better your credit, the more you can
borrow, for a longer period of time.
The shorter the time you take your loan out for, the less
you are going to pay in interest rate fees over the life
of the loan. For example, say you borrow $15,000 at 15%
for 36 months, you will pay $520/month and $18,720 for
the entire loan. However, if you stretch out the loan
over 48 months instead, you will pay $417/month and
$20,016 for the entire loan. Use the
personal loan calculator to determine loan payment
calculations.
Lump sum loans are usually deposited directly into your
checking or saving accounts for you to use as you wish.
Payments are typically made with coupon books. A lump sum
personal loan is typically a good idea if you
planning a wedding or
vacation.
Personal Line of Credit
Lines of credit are
adjustable rate loans. As a result of
the fluctuating interest rate, you will likely end up
paying more money with this type of loan.
The way
lines of credit work are similar to a
credit card.
Lets say you get approved for borrowing $15,000 for four
years. You can borrow any amount of this $15,000 at any
given time. As you pay the money back, it is their for
you to borrow again. For example, if you borrow $5,000 of
the $15,000, you still have $10,000 of your line left to
borrow. However, your entire line of credit must be paid
off by the time the four year term is over.
A line of credit will come with a check book for you use.
Home improvements or funding college are examples of
loan
types that should utilize a line of credit.
Star Loan Services also offers
good and bad credit home equity loans. These loans
allow you to use the equity from your home for cash.
Learn more about the
equity loans we offer.
|
