Personal Loan Basics 3 Common Loan Types

Personal Loan Basics - 3 Common Loan Types
At some stage in​ life most of​ us have needed to​ apply for a​ personal loan .​
The biggest hurdle is​ where to​ get the​ best deal .​
With so many options available to​ you​ here are some helpful pointers to​ guide you​ in​ applying for the​ right personal loan.
Payday Loans:
A payday loan is​ perhaps the​ easiest to​ quick cash .​
This type of​ personal loan is​ very convenient as​ it​ can transfer the​ money into your checking account within the​ same day.
Usually,​ the​ cash limit on​ this personal loan can be as​ much as​ $1,​000,​ while other more stable credit facilities can go higher .​
However the​ interest rate on​ this type of​ personal loan could soar as​ high as​ 30 percent,​ and require you​ to​ repay the​ loan amount within two to​ three weeks .​
The maturity date can run longer,​ but the​ longer its maturity,​ the​ higher its interest expense will be.
Secured Personal Loans:
A secured loan is​ the​ personal loan that can leverage the​ largest possible amount you​ can borrow .​
Usually,​ this type of​ loan is​ used to​ fulfill a​ need that requires higher capitalisation such as​ buying a​ car,​ or​ booking a​ holiday.
As the​ name demonstrates a​ secured personal loan requires a​ security against the​ borrowed money .​
Security in​ the​ form of​ a​ valuable asset or​ property,​ also known as​ the​ collateral .​
a​ collateral is​ something of​ greater value than the​ desired loan amount such as​ your car,​ your house,​ or​ land that you​ own .​
One of​ the​ advantages of​ a​ secured personal loan is​ getting the​ best possible deal .​
Because you​ are providing security of​ value against the​ loan you​ will generally get a​ more competitive interest rate,​ and better repayment options.
Unsecured Personal Loans:
On the​ other hand,​ there are several types of​ unsecured personal loans in​ the​ market .​
An unsecured personal loan means that you​ do not need to​ provide collateral against the​ loan .​
This type of​ personal loan comes with high interest rates as​ the​ lender is​ taking on​ more risk than a​ secured loan .​
Generally only people with good credit ratings will be offered the​ option of​ going unsecured as​ they have a​ proven record of​ good credit history.
As you​ scout for a​ personal loan that suits your needs be very inquisitive to​ the​ smallest detail of​ the​ terms and policies .​
There is​ a​ wide range of​ service charges,​ interest rates,​ and penalty clauses that should be considered first .​
Make sure you​ go around and check various offers before you​ finalise your application.
Personal Loan Basics 3 Common Loan Types Personal Loan Basics 3 Common Loan Types Reviewed by Henda Yesti on August 10, 2018 Rating: 5

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