Loans!
They are rescuers and problem
solvers when related to finance. It is all the more important to know
what it is before applying for one. Loans are provided by banks,
private financial institutions and private lenders. Loans are of
different types, for specific purposes and customized for specific
applicants.
There are four major types available.
Personal Loan:
A personal loan as the
name implies is for your own personal use. Any immediate
requirement for expenses, these loans can prove to be very helpful.
Personal loans can be availed for medical expenses, wedding expenses,
down payment o home loan, sudden business requirement, transfer of
credit card outstanding and even funding for holidays and purchasing
consumer durables.
Home
Loan or Mortgage Loan:
This category of loan is
provided for a new home purchase or using your existing home mortgage
as collateral to get a loan for other purposes. Like any other type of
loan they also have certain conditions and requirements to be qualified
to be eligible for this loan. Home
loans are available for a longer tenure period.
Car Loan or Automotive Loan:
This category deals with the
purchase of automobiles. Means of transportation have become an
inevitable factor in today’s world, A new one or even a used
car are expensive and you might not be in a position to finance the
whole amount at once. This is when you think about the loan
option. Automobile dealers also provide auto loans from lenders who
have tie ups with them. Again there are certain requirements that you
need to qualify to avail this loan specifically your income status.
Education Loan
or Student Loan:
This loan is provided for
students who are looking forward to do higher studies. Since education
and training can have a direct effect upon financial success, many
banks, and government-sponsored financial aid programs are growing in
numbers to provide opportunities for those seeking educational finance
assistance.
Loans as such are a part of everyday living. It is crucial to know the
pros and cons of each and every loan before you even think of applying
for one so that you can decide on the best.
A Different
Categorization of Loans
Loans are taken in urgent situations. When urgency
comes into play, problems are not far behind if you don’t
consider the pros and cons of what you are entering into. A loan is a
money transaction between a lender and a borrower and this transaction
is provided at a cost, called the interest.
As there are different types of loans a personal loan,
home loan, educational loan, car loan, the loans can also be
categorized based on the security as Secured
and Unsecured Loan.
Secured loan: This loan
is availed against security. Secured
loans imply that the borrower offers a guarantee, or
collateral. The borrower has a claim on this collateral as a repayment
source if it is not paid pack on time. For example, a home mortgage is
a secured loan. A secured loan has several advantages such as low
interest rate, longer repayment period and other convenient terms and
conditions.
Unsecured loan: There is
no need of security in this case. Unsecured
loans are loans that are not secured by collateral, such as
credit cards. Because the lender holds no collateral, unsecured loans
hold significantly more risk for the lender, which is usually reflected
in a higher interest rate. However the rate of interest for unsecured
personal loan is higher than that of secured personal loan, but you can
also avail this feature if you have good credit history. And, you need
not tell the reason for getting loan necessarily.
Check out for an overview
of various types of loans...
We make sure that you have the complete options before
you opt for the best loan .
