Types Of Personal Loans
We all like to have luxuries in our lives. But what if you are from a middle class background and can't really afford them. In some cases too, you may suddenly require money for an emergency situation. You may need extra money to run a program like a wedding or meeting. I'm sure you would have experienced these kinds of situations in your life or you may experience them sooner or later.
In situations like this in life, you need to take a personal loan to meet these unforeseen expenses. To help you out with personal loans in this article I will be talking about the different types of personal loans. This way, when you take a personal loan the below information will come of use to you. Now, there are three types of personal loans that are categorized on the basis of loan amount, time period, and interest rate.
These three types are secured loan, unsecured loan, and line of credit. Let us have a look at them in detail.
Secured loan: This loan comes with some kind of pledge against the money in which you will have to pledge an asset like a car, jewelry, or home in the form of security. This ensures that you will pay the loan on time. You can easily avail this kind of loan as banks and many money lenders issue this loan as they possess the documents in case of default on the payment. The interest rate in a secured loan is low when compared to an unsecured loan.
The main problem with this kind of loan is that if you fail to repay, the bank or money lender has all the rights to repossess the security what you have pledged.
Unsecured loan: Like the name goes, this loan doesn't require you to give any kind of security against the loan. You can get an unsecured loan only for small amounts and it is issued only if you have a good credit. Since there is no security with the bank or money lender, the interest rate is higher than that of a secured loan.
Line of credit: In this type of loan, the bank or money lender offers money that you can use for a specified time period. You can withdraw up to the maximum limit during the specified time period, depending on your need and requirement after which the amount of credit is determined. This type of loan can be secured as well as unsecured and the best part of this loan is that the interest is paid only on the money actually withdrawn.
There you go, now you have three choices which you can make according to your needs.
Types Of Personal Loans
By: Jenny Maloy
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