There are multiple types of personal loans offered by banks or other financial institutions. When choosing between these types of personal loans, you need to keep your requirements in mind. Besides this, you also need to consider the rate of interest before you decide to opt for a specific type of personal loan. Opting for the appropriate loan can be beneficial to anyone, provided you have researched well and take the loan from a reputable and experienced lender.
- Secured Loan:
With secured loans you need to put up an asset as security to borrow the required amount. This might be a car, a home or even jewelry. The lender can repossess this asset in case you fail to repay the loan on time or intend on defaulting at any point.
- Unsecured Loan:
Unsecured loans do not require you to provide any asset as security. However, they do require you to provide evidence of your current income to convince the lender that you’ll repay the loan on time. A guarantor can make procuring this loan easier.
- Student Loan:
Student loans are specifically for those students which need financial help during their college or university experience. This loan can be deferred up to a period of 5 years and there are multiple financial institutions offering these loans without any upfront fee.
- Debt Consolidation:
Taking a loan after combining all your debts can make the repayment of the debts easier and more convenient. This is what the debt consolidation loan is all about. This offers the benefit of making only one regular payment every month instead of multiple payments made for the different debts.
- Line of credit:
An overdraft or the line of credit loan works well for any emergency. You can overdraw from your account the amount which is agreed by the lending financial institution. The interest is generally charged only on the money used.
- Fixed Rate Personal Loan:
The fixed rate personal loan has the interest rate fixed throughout the term of the loan. The lender cannot raise the rate of interest under any circumstances.
- Variable Rate Personal Loan:
Opting for the variable rate personal loan, you need to be prepared for a change in the interest rates in accordance with the change in the credit market.
- Single Payment Installment Loan:
The borrower needs to repay the loan along with the interest on a lump sum basis by a specific date agreed upon. There are a limited number of lenders offering these types of personal loans.
- Installment Personal Loan:
With installment personal loans, the agreed amount is given to the borrower in one go but the borrower needs to repay this in equal monthly installments. There is a possibility of less interest being charged as each payment reduces the principal amount of the money borrowed.
- Peer-to-peer Personal Loan:
Peer-to-peer loans are offered by real people and not financial institutions. The credit requirements for these types of loans can be less complicated and more flexible.
Before opting for a specific type of personal loan, find out which type meets your requirements so that you can benefit to the maximum.