If you see something that you don’t have the money to pay for now, but can pay for over time, what are you going to do? The general way you would go about acquiring this item would to be to save up money, or you could always ask for a loan. You are asking someone to issue you a line of credit that you will pay back over time until the balance is back to zero on the loan. What forms of credit are out there for you to access?
The most common form of credit is a credit card. The credit card is a certain amount of money that a company will loan to you to use for whatever you want. The only catch is that you have to pay it back with interest. Most banks will offer a credit card and offer different perks and other rewards for using their card. Most people have at least one, and usually several, cards at once.
Another common form of credit is a some sort of a personal loan from a bank. Whether it be a car loan, home loan or some other form of a loan, it is credit issued by a bank for a big purchase. A bank will give a person the money to pay for the car, house or other items, and the bank will then own the property that you use until the loan is paid off.
One form of credit that people overlook is the payday loan. A payday loan is a from of credit in which people who can’t get any other type of loan can get money simply on the promise that they have a paycheck that the bank will get when the person gets paid. The interest rates are very high, and the loan period is typically only a week or two. Failure to repay can really put you in a financial bind.
Pawning is actually a form of credit. It is a barter where someone takes in a good in exchange for cash for that good. The item is used as collateral on the loan meaning the pawn shop will hold the item until the loan is paid off, or will sell it if not paid back in time. It is a win win for both sides because there is no credit check and the item is what is used as the basis for the loan.
There are going to be many forms of credit available as long as there are people out there who need money. Your credit score will determine how much you can get and what it is going to cost you to pay back that loan. However, you should use credit wisely and don’t abuse it no matter what kind of credit you are trying to get.