There are multiple options when considering a personal loan; the type of loan you require depends on your personal requirements and your financial situation. Listed below are some of the various types of loans available and the specifications regarding each.
If you choose an unsecured loan, there is no requirement to sign any asset as security to the lender. Those who do not own a home, or a car can still opt for an unsecured loan. You will have to provide the lender evidence of your income to ensure that the repayments will be made on time. A guarantor can be helpful for those applying for this loan for the first time. These loans typically have a lower rate of interest compared to ‘buy now pay later’ offers and credit cards.
For secured loans you need to put up an asset with the lender for the purpose of security. Banks generally accept homes, cars, and jewelry as collateral. This means the lender can take over your asset in case you fail to make the scheduled repayments. Because the lender receives collateral in exchange for the loan, secured loans can be easier to obtain than unsecured loans.
Line of Credit:
A line of credit can be a good option for emergencies. With this type of financial product, you can draw from your account a sum which is agreed upon with your lender. The interest is usually only charged on the amount actually used and not on the maximum amount you borrow. Because of this, a line of credit can be beneficial in times of emergencies.
Students generally face a money crunch when attending college. There are multiple financial institutions offering students loans which can help them buy the required text books, laptop or pay for other expenses related to education. This loan can be deferred up to a period of five years and there are many banks which do not even charge upfront fees for this loan.
Debt Consolidation Loan:
Opting for a debt consolidation loan is one way to get out of debt. One single loan combines all your debts, which helps in clearing up multiple payments and can provide a lower interest rate.
Home Renovation Loan:
Multiple financial institutions offer home renovation loans which can help in the renovation and repair of a home.
Opting for this personal loan is usually simple and easy. There are financial institutions which can clear the loan in a time span of only 72 hours, that is, only if the eligibility criteria is met and the borrower has a good credit score.
Many personal loan providers also offer the flexibility of choosing the term length. The length can extend up to 7 years, which means you have plenty of time to repay the loan, but also time for interest to accrue. As always, you should do your research and ensure you select a well reputed and qualified financial institution when applying for a personal loan.