A variety of loans satisfying various needs are available today. Though a number of them have come into existence, personal loans have retained their status. They are highly valuable and the preferred type for many. Here is a discussion on the various types of personnel loans, their advantages and disadvantages.
Types of personal loans
There are fundamentally two types of personal loans, the secured type and the unsecured type.
Secured type of personnel loan: As implied by the name, this type of personal loan can be obtained only if the borrower keeps an asset such as real estate property, car or jewelry as security with the lender. The loan amount to which the borrower is entitled depends on the collateral amount shown by him.
However, other requisites such as good credit report and employment status are also necessary for the applicant to qualify for secured type of personnel loans.
Unsecured type of personal loan: All the requisites for this type are the same as that of the secured loan except for the security deposit. Unsecured type of personal loans does not require any security.
Both these personal loans can be obtained very easily through a great number of online lenders. However, it is essential to check the authenticity of the lender before keeping any valuables in the form of security.
Advantages of personal loans
1. Low interest rates: To avail this benefit to the full extent, take a maximum eligible amount as the loan amount.
2. Fixed interest rates: Unlike other loan types where the interest rates vary as per the market trends, personnel loans are very safe in this respect. If you select the stable interest rate plan instead of the floating interest rate plan, you can well plan for the loan payments very easily.
Factors to be checked at the time of selecting personnel loans
1. Plans offering a gift amount: Certain lenders introduce plans that promise a gift upon applying for a loan. Never fall for such tricks! This will increase your loan amount in the form of interest rates.
2. Analyze all the available plans carefully. It is recommended to go for a basic plan with simple terms and conditions. Make sure that the personnel loans plan is easy to repay.
3. Payment protection insurance: Certain lenders try to sell you payment protection insurance at the time of taking the personal loans. They say that the insurance repays the loan in case of your death or repays the loan payments in case of major accidents, business loss etc.
Though these insurance advantages sound very good, do not get into them. Taking the insurance increases the monthly personnel loans payments.
4. Go through the documents carefully before signing: Go through each and every clause twice. If you are not clear on any information do not hesitate to get it clarified from the lender. Also, assess your financial status to make it clear if you can repay the personnel loans within the loan period.
From the above discussion it can be seen that personnel loans are the best loan plans to satisfy your financial limitations. However, beware of lenders who are out there to just make profits.