Monetary shortage is common amongst citizens of every region of the world. Loans are meant for assisting them at the time of trouble or for accomplishment of their dreams. These loans come as blessing in emergencies and sudden need of money, especially when you are not comfortable with the idea of borrowing from your relatives. Loans assist people whose dreams could be studying in a good college, getting their favorite item, purchasing a house or a car and so on.
Every loan has a certain set of features, which are not meant for people in general. Numerous loan deals are available there that cater to different categories of people and are formulated according to their requirements. The loan that is suitable for your sibling or a friend might not be the best choice for you. The most reasonable method to determine a good loan for you is to enlist your requirements and find a loan accordingly. As there is a wide variety of loans being offered, it is beneficial if you compare loans that you find the most suitable for yourself.
Mainly there are two types of loans, secured loans and unsecured loans. A brief introduction of both will follow as well as the loans that fall into these categories.
Secured Loan: secured loan is named thus because it is protected by an asset. Primarily these loans would be safer for the finance company or bank as they can hold on to your item until you have repaid them the whole sum. However, secured loans are preferred when a huge sum of money is needed on urgent basis because a lender would not pay you a large amount of loan unless they have something to tie you down. This collateral or asset could be personal property, automobiles, savings accounts etc. This guarantees that you will everything you can to repay the loan. Additionally these loans offer lower interest rate, clear terms and negotiable repayment options.
There are several types of secured loans. These secured loans are devised according to the popular needs and demands. Examples of secured loans are secured debt consolidation loans, bad credit secured loans, secured wedding loans, secured holiday loans, secured business loans, secured car loans, secured home improvement loans, secured unemployment loans etc.
Secured loans are the best option for people who have existing sources or resources to use as collateral. The interest rate, loan duration and loan amount varies corresponding to the loan type being availed.
Unsecured Loan: unsecured loans do not have protection of an asset or collateral. The lenders loan money just based on the persons previous history and some legal papers, but they may or may not be able to claim charge on any asset of an individual. When you borrow money from your friends or family, it comes in the category of unsecured loan. Credit cards also follow unsecured loaning criterion and some banks provide unsecured loans as well. The loans are allotted after assessing creditworthiness of a borrower. Borrowers with lower credit scores are less likely to get an unsecured loan. The catch in an unsecured loan is that the lender does not have any collateral, therefore you cannot get larger loans and he/she set any interest rate, repayment amounts and increases the rate at any time they wish, as the terms are not decided beforehand.
As unsecured loans do not provide large amount of money, thereupon the scope of its utilisation is limited. With an unsecured loan, you can do some shopping or pay the bill for one visit to the doctor and medications. Best value loan is undoubtedly the secure loan as it fulfills the three basic conditions for a value loan. It has clear terms and conditions, affordable interest rate and flexible repayment amounts and duration.