Personal Loans And Their Various Types
Personal loans and their various types
In life , you will need to take a personal life , in order to solve your emergencies that may arise in our everyday life. What you need to understand that as far as you are not from an affluent or rich background ,you will need to get personal loans in order to pay emergency bills such as rent, electricity , medical and tuitions bills that needs to be paid for .
Base on this need for a personal loan , in this article you are going to look at the various types of personal loans that are available in the market online and offline base on certain characteristics of the personal loans such as the loan amount , the repayment period and the interest rate.
The three major types of personal loans include secure loans, unsecured loans and line of credit.
Secured loan: In secured loans , the most important characteristics of this type of loan is that you have to pledge an asset such as a car , a land , jewelry or a house for this type of loan. Most banks offers this type of loan and they will be in custody of the title document with respect to the what you are using to pledge for the loan if case you default in payment. Generally secured loans comes with low interest rate than any other type of personal loan. The major disadvantage is this type of personal loan is that if you default in repayment , the bank has the legal right to repossess the pledge asset from you as they have the title document with them , making it easy for them to even sell off the asset in order for them to recover their money back with interest.
Unsecured Loan: Just as the name , unsecured loans are granted to persons without any security that serves as a pledge for the loan but such loans are only granted with to persons with good credit rating for a small amount of money and it usually comes with high interest rate.
Line of credit : In this type of loan , the lender or bank provides you with access to money that you can use for a specified period of time and you can redraw from the line of credit within the specified amount limit and time .After the specified period, you line of credit is being determined and a repayment plan will be worked out by the bank for you. In this type of loan , it could be either secured or unsecured loan and interest is only paid on the actual amount that was redrawn on the line of credit loan .
by: globalglobal
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