Sometimes despite your best efforts, your family can wind up a little short on funds and credit. What can a family do to build some credit and get some cash? Here are four kinds of loans that can help.
1. Credit-Builder Loans
If you need a credit boost, look no further. The way a credit-builder loan works is you and the bank agree on a total loan amount and a monthly payment. Then when you’ve finished paying, you get the money. It is practically impossible to hurt your credit with this type of loan, which is an especially good option for a teen or young adult new to the world of credit and finance. Teens will get a good credit history and be rewarded with a nice sum of money at the end which has already been paid off, just like a savings account.
2. Borrowing from Retirement or Life Insurance
If you hold a retirement or life insurance policy, chances are you can borrow from it. If you do this, you are essentially borrowing money from your future self. This is a great option if you don’t want to be indebted to a separate entity, since it is your own money. Just be aware that if you don’t pay back your retirement or life insurance loan, there can be some tax consequences.
3. VA Loans
VA loans do not actually come directly from the Veterans’ Affairs Department. Essentially, the VA acts as a cosigner, helping you secure better terms and much lower interest rates. For instance, services like those available at Low VA Rates, can help veterans acquire lower interest rates on homes. If you’re an eligible veteran, this can be a huge help to your family’s financial well-being, from short-term cash flow to long-term savings. Banks like them too, because the VA guarantees to pay 25-50% of any loan they sign off on in the event that the borrower defaults.
4. Consolidated Loans
If you have complicated finances or a lot of debt, particularly student or credit card debt, consolidated loans can help you simplify your finances and lower your interest rate by combining all the various debts you owe into one loan, often a personal loan or a second mortgage. Only one monthly payment means better cash flow for your family.
There are a lot of options for families who need a little financial help. All of these loans can be great resources if used responsibly. Remember to always explore your options before jumping into a loan to make sure you’re getting the best deal possible.