With how easy it is to borrow money with no credit check from a number of sources these days, it can be a tempting option for people in dire straits. It’s hard not to be aware of the fact that this option exists if you live in some places, given how pervasive advertising for it has become. At the same time though, you must always be careful when going down this path. It’s a slippery slope that can end in disaster if you’re not careful, and many people have found themselves in even worse situations than they were in before taking out a loan, simply because they did not think ahead.

Plan Ahead Properly

Which brings us to our first point – planning! It might seem like an obvious one, but you’d be surprised by the number of people who live their lives with a “borrow now, worry later” style of thinking. And even if that doesn’t end in tears the first time, it always inevitably does. The only question is when. There are various questions you can ask yourself before even walking into a bank in order to ensure that borrowing is a good idea.

How long is your working contract? Do you suffer from any illnesses that might prevent you from working in the coming months? What’s the reputation of the lender? Is there a risk you’ll be late on payments? What’s your back plan in case you have to default? These are not questions you should be pondering for the first time right as you’re about to put down your signature.

Don’t Go for the Largest Sum You Can Borrow

Having a good credit history and a stable job can open many doors to you as a potential borrower. Many lending institutions will provide you with highly attractive deals, low rates, and most important, high borrowing ceilings. But just because you’re given the option to take out a huge loan doesn’t mean that you should go for it! Even if you can see yourself repaying the money in full without any issues, don’t go for more than what you really need.

Many people in this kind of situation immediately start having thoughts like “But what if I just took out $6000 instead of $5000 and got myself that new TV I’ve been eyeing for a few months?” It’s all downhill once you allow those impulsive thoughts to enter your brain, and you’ll find yourself on the fast track to being in perpetual debt.

Explore Alternative Options

Just because you need cash urgently doesn’t mean that you should immediately rush to the bank. Think about alternative options before putting yourself in debt. Is there anything of value around your home that you can sell off and won’t miss, for example? This is a good opportunity to do some “spring cleaning”. Of course, don’t sell stuff that you actually need – the last thing you need when you’re already in a bad state of mind due to being short on cash is to feel even worse from losing something you liked.

Borrowing from friends and family is also an option you should not ignore if it’s available. It’s much better to swallow your pride and admit that you’ve hit rock bottom than to deal with creditors and debt collectors hounding you on a daily basis because you miscalculated your repayment capabilities.

Keep Your Credit Score in Check

Don’t allow this situation to bring down your credit score either! You should use this opportunity to actually put yourself in a better place for the future, and if you’re smart about it, that’s certainly possible. After all, your credit score is affected heavily by borrowing money and repaying it in a timely manner. If you keep up with all your loan installments and don’t miss a single one, you should end up with a better score once this is all done.

And that, in turn, will make you much more prepared for the future. You’ll have a smaller chance of finding yourself in a bad financial situation if you maintain a proper credit score. And even if you do end up needing to borrow money again in the future, you’ll have access to much better deals than you do now. Your credit score is a powerful tool that not many people know how to use right, and this could be a good learning opportunity.

In the end, loans can be great when you need to get back on your feet as quickly as possible. And while it’s true that they can also be a problematic factor for many people, this mostly boils down to personal responsibility and planning ahead. As long as you know what you’re getting yourself into, you shouldn’t face any issues.

The lending industry is growing stronger and stronger. Many institutions and private lenders are capable of offering increasingly better deals to their customers. At the same time, people have access to even more information about the options available to them. However, somewhat paradoxically, it looks like many people today are largely confused by the huge variety of products on the lending market.

It’s true, there’s no shortage of deals all around you at any time, and it can be a bit overwhelming to learn about them all if you need to borrow for the first time. With that in mind, let’s take a look at some of the general ways to classify loans and find out what’s unique about each type.

By Duration

Loans can be taken out for a short or long term. Some products are designed to be repaid over a period of many years – sometimes 10 or even more. On the other end of the spectrum, we also have loans with extremely short durations, sometimes a month or less. However, these types of loans are typically regulated more tightly in some jurisdictions, as they have proven to be prone to abuse by unscrupulous lenders. Still, using them correctly – where they’re available – can make them a very useful tool for getting out of tight financial situations on short notice.

The duration of your loan will not necessarily be determined by you, however. Or rather, you may not have much of a choice in this regard. If you have a low credit score, or need a very specific type of loan, you may find that the only products available on the market have a very tight range of repayment periods.

By Type of Borrower

Loans can also be categorized according to the type of entity that takes them out. In this regard, we have personal and business loans. The names should be self-explanatory – however, the exact conditions associated with each type of loan are not immediately obvious. For example, there are many situations where a personal loan can prove more useful for the needs of your business compared to what’s available from business lenders.

The opposite is not true however. Taking out a business loan usually comes with some strings attached, the most important one being that you have restrictions regarding what the loan can be spent on. Often, you’ll be required to sign a contract stating that you intend to use the funds in this very specific manner, or otherwise face negative consequences. You should be very certain about your intentions if you’re planning to take out a business loan, on top of ensuring that your company is in an appropriate position to repay the loan in the first place.

Secured vs Unsecured

Some loans require you to put up some collateral before you’re allowed to receive money. In other cases, you can skip that part. This is generally referred to as secured and unsecured loans. In most cases, as you’re probably guessing, secured loans expose you to much better conditions and provide you with better repayment options, interest rates, and general availability of deals around you.

On the other hand, an unsecured loan may either be more difficult to obtain, or may have worse conditions. There are also some special types of unsecured loans, like student loans, but we’ll take a look at those in more detail below. In general though, if you need money for a house or car, you will be out of luck looking for an unsecured loan. Nobody in their right mind would give you that much money without collateral, as you’re probably guessing – unless you have some extremely rare circumstances around you. But the people who fall in those categories rarely need loans in the first place.

Special Circumstance Loans

If you’re a veteran, you should take a look at VA loans. They can provide you with much better conditions compared to the average package on the market, although you need to fit certain criteria as a veteran in order to be eligible. Student loans are also aimed at a special group of people – students, as the name implies – but they have to be used towards your education and also have some special conditions, like the fact that you can’t get rid of them even through bankruptcy in most cases.

There are many more types of loans on the market, and this is barely scratching the surface. But these general categories should help you get started and hopefully at least point you in the right direction in your search for the ideal loan product. Rest assured though, as long as you have a plan of action and are honest with yourself about your resources and repayment capabilities, there’s always something suitable out there. You just need to search long enough to find the right deals.