best and worst type of loans?

[20percent]

In your opinion, if one was going to take out a loan, how would you order the following type of loans from best (top) to worst (bottom)

payday loan, credit card loan, car title loan, peer to peer loan, family member loan, bank loan, credit card cash advance, pawn store loan, second mortgage loan, 401k loan

[disneysteve]

What's the difference between a credit card loan and a credit card cash advance?

[disneysteve]

Without any more details like the purpose of the loan, the interest rate, etc. I'd put the payday loan, title loan, and 401k loan way down at the bottom of the list. Those are things nobody should ever do under virtually any circumstances.

Next up would probably be the credit card and family member. Then the peer to peer. Then the bank loan and 2nd mortgage as the best options.

I didn't rank the pawn shop loan because I don't know enough about them but I suspect it would rank at the bottom with payday/title/401 loans.

But again, some of this depends on factors not given.

[Weird Tolkienish Figure]

In your opinion, if one was going to take out a loan, how would you order the following type of loans from best (top) to worst (bottom)

payday loan, credit card loan, car title loan, peer to peer loan, family member loan, bank loan, credit card cash advance, pawn store loan, second mortgage loan, 401k loan

Loan for "stuff you want" = bad.

Loan for "Stuff you need" = better

Loan for "opportunity costs (new business, education for better job, etc.)" = the best

People slam lending, often rightly, but it really is the life blood of capitalism. Lending creates jobs and new opportunities. Without lending there'd be almost no job growth. But you need to differentiate good and bad debt. Buying a big screen TV on credit doesn't do anything but hurt the borrower. The exception is if you have cash to buy, but just want to funnel it through your credit card to get the points. I do this. Using credit to fund a new business does create jobs and economic opportunity.

[Weird Tolkienish Figure]

What's the difference between a credit card loan and a credit card cash advance?

Cash advances usually have horrible interest rates, even worse than credit cards. I've never done it but I've seen the rates. Yikes!

[disneysteve]

Cash advances usually have horrible interest rates, even worse than credit cards. I've never done it but I've seen the rates. Yikes!

I know that. I just wasn't sure what he meant when he said "credit card loan." If he meant just charging something to the credit card and carrying a balance, that would rank really low just above payday/pawnshop/401k because of the high interest rate unless it happens to be a 0% deal.

[20percent]

I'm kind of in a bind with no good solution. I need to get a $20,000 loan for my business (a key piece of equipment broke and needs to be replaced or I can't operate and earn anything) and I'm trying to look at all the options. I'm confident I can pay it back, but would like to get the best option in a bad situation. I know the bank small business loan is probably best, but that may not be an option due to time.

[disneysteve]

I'm kind of in a bind with no good solution. I need to get a $20,000 loan for my business (a key piece of equipment broke and needs to be replaced or I can't operate and earn anything) and I'm trying to look at all the options. I'm confident I can pay it back, but would like to get the best option in a bad situation. I know the bank small business loan is probably best, but that may not be an option due to time.

How long do you realistically expect it to take to repay the loan?

[corn18]

Based on what you described, get a second mortgage. Lowest rate, best terms, pay it off as soon as you can.

Tom

[20percent]

How long do you realistically expect it to take to repay the loan?

I think I can pay it off in a year as long as something similar doesn't happen to know me off track (I don't anticipate this happening)

[20percent]

Based on what you described, get a second mortgage. Lowest rate, best terms, pay it off as soon as you can.

Tom

I too thought this, but I'm hesitant. Until this point, I have strictly kept my personal finances and the business finances separate, and I don't want to start that now. I know this is a special situation where it might make sense to break that rule.

[disneysteve]

I need to get a $20,000 loan for my business (a key piece of equipment broke and needs to be replaced or I can't operate and earn anything)

I think I can pay it off in a year as long as something similar doesn't happen to know me off track (I don't anticipate this happening)

I think you have a bigger issue overall. You're running a business with no safety net. If one piece of equipment breaking puts you out of business, you need to maintain a large enough cash reserve to be able to repair or replace it promptly. Another option, which you should probably also do, is to open a line of credit for the business so that you have quick and ready access to cash if needed - like now.

I'd be out tomorrow talking to banks, especially any smaller local or regional ones rather than the big national ones, to see who is willing to give you the best terms.

[Fishindude77]

When running a business, you need a banking relationship. You need to deal with a bricks and mortar local bank where you can walk in and talk to a loan officer that can help you work through your various needs. You should also have a line of credit set up in advance, so that when issues such as this come up you can draw on it without starting from scratch.

Sounds like it's too late for this, so a home equity loan might be your best bet? Once you get this behind you, when times are good and money isn't needed, get things set up with a local bank so you don't get in a pinch like this again.

[tripods68]

In your opinion, if one was going to take out a loan, how would you order the following type of loans from best (top) to worst (bottom)

payday loan, credit card loan, car title loan, peer to peer loan, family member loan, bank loan, credit card cash advance, pawn store loan, second mortgage loan, 401k loan

I recommend to AVOID these loans PERIOD!


Save your money and pay $$

[tripods68]

I think I can pay it off in a year as long as something similar doesn't happen to know me off track (I don't anticipate this happening)

Your ability to pay for it without a plan and the confidence doesn't bode any confidence. Maybe you should not take a loan out period! Save up instead! Why take a loan when you can pay for it in cash....