Personal Loan Types – Different Types and Uses
Personal Loan Types – None of us like loans. But, in the current social and economic circumstances, it is quite difficult for a person to organize money for additional expenses other than budgeting. And loans are the only possible way to arrange financing to meet their needs. The widespread popularity of the personal loan often makes people comment on it, the dream financier.
Personal loan is the type of loan that can be use for any purpose. Most other loans are approved for a specific purpose, such as home loans, student loan, and debt consolidation. Personal loans have gained acceptance mainly due to the inadequacies of the other loan to meet all the needs. Targeted loans can only be used for one reason and not for another, although needs may vary. While the personal loan can be used for all purposes such as repairs, hospital expenses and even for a dream vacation. To get the most affordable and adequate personal loan, the different types of loan must be obvious.
2 Main Types of Personal Loan
The personal loan can generally be classified into two categories: secured personal loan and unsecured personal loan. An unsecured personal loan can arrange without the support of any collateral. The personal loan can be use at any time and the unsecured personal loan does not impose any risk of loss of your assets, due to defaults on the loan.
Unsecured Personal Loans
Unsecured personal loan can be obtain from all sources and includes credit card loan, unsecured loans from banks, private lenders, etc. Cash advances and payday loans can also be view as unsecured personal loans. But the lender will not be entirely satisfied with this agreement as there will be no assurance as to the amount of the loan. To offset the risk of the transaction, they will be very strict in the interest rates of the loan amount and the repayment tenure will be decreased.
Secured Personal Loans
On the other hand, the secured personal loan is more comfortable for the borrowers as for the lenders. If borrowers can provide collateral for any property, such as a home, property, or other valuable property, lenders are still lenient in their terms. You can benefit from the best interest rate and a long repayment schedule with a secured personal loan. The guaranteed personal loan includes personal home equity loans. But the risk is with the borrower, you have to be strict in your repayment. Otherwise, you will lose your precious asset. Lenders can even foreclose if you don’t pay the payments.
As with any other loan, the types of personal loans are also provided based on the credit report of the person. For people with good credit, it will certainly be easy to find the best deals.
Personal Loan Types – Bad Credit
But now bad creditors are also receiving good offers from specific bad credit lenders. Comparative market research will help everyone find the best personal loan. Depending on personal preference, the appropriate type of personal loan can be selected.