The lending business is growing rapidity. More and more people are taking loans for all sorts of purposes. Of all the available types, personal loan remains the all time favourite of all. It is the most saleable and hence the most profitable loan type in the whole world.
A personal loan provides significant solutions and diverse choices under the following categories:
Secured personal loan – is the best choice when the requirement is long-term and when one needs a large amount of money. In order to avail it, one needs to pledge something valuable as collateral
Unsecured personal loan is the best option when the requirement is short-term or urgent and when one is unable or unwilling to pledge something valuable as collateral. In order to avail it, one simply needs to have the proof of a good credit history and sound repayment capacity
Bad credit or high-risk personal loan is the only alternative when one is having major financial difficulties or crises
The cons of a secured, unsecured and bad credit personal loan are:
Secured personal loan – if the borrower defaults to pay back as decided then the lender can seize the pledged collateral to recover his money. Also, the entire property evaluation procedure slows down the loan approval process
Unsecured personal loan the lender imposes high interest rates, flat repayment terms and other loan clauses, as collateral is absent to take care of the risk factors
Bad credit or high-risk personal loan the interest rates are highest and repayment terms most stringent, as it is the diciest pact
The pros of a secured, unsecured and bad credit personal loan are:
Secured personal loan – the lender facilitates with low interest rates, negotiable repayment terms and other loan clauses, as collateral takes care of the risk factors
Unsecured personal loan if the borrower defaults to pay back as decided then there is no immediate risk to his priced possessions and a legal action against the defaulter is the only way out. Also, absence of collateral speeds-up the entire loan approval process
Bad credit or high-risk personal loan the borrower gets the chance to recover and improve his credit record for the future
On the basis of mode of repayment, a personal loan can be categorised as:
Instalment loan the loan is repaid in the form of monthly instalments, which carries both the principal and the interest elements
Balloon loan – the interest is paid at regular intervals and the principal amount is repaid at the end of the loan period
Single payment loan – the entire principal as well as its interest is paid at the end of the loan period
The above-mentioned mode of payments validates the flexibility aspect of personal loans. Hence, they have always been a favourite for purposes like home improvement, debt consolidation, higher education, car purchase, wedding or vacation planning, etc. So, look and wait no more… Some of the most competitive deals are just a mouse click away.
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