About Types of Personal Loans
It has been observed that people stick to the product and services that are familiar to them. Who won’t love it? Same is the case with loans the person will wants to avail the loan if he/she are well aware about it, as we live in an era of putting in less effort and get maximum output which is also called “smart work”. This way the person can avail a loan more easily, confidently and quickly.Types of Personal Loans are as under:
Unsecured Personal Loan:
These are the types of personal loans that do not require collateral like your home, car or any other collateral. This makes them risky for the lenders to lend the loan as he does not have any security. The percentage rates are a bit higher in these types of loans.
The approval and the rate the person receive are based on the credit score. The rates usually range from 5% to 36% and the tenure usually ranges from one to seven years.
Secured Personal Loan:
In secured types of personal loans the applicant needs to provide the lender with some collateral that can be seized by the lender in case the person does not repay the loan in the given time. Some banks credit union and also online users offer secured personal loan where you can borrow loan against your car, house or any other asset. Rates are lower than that of unsecured loan, as these types of loans are less risky.
Most personal loans carry fixed rates, which makes your rate and monthly payments stay the same for the life of the loan.
Fixed-rate loan makes sense if the applicant needs consistent payments every month and if you are concerned about the rising rates on long term loans. Having a fixed rate makes it easier to budget, as the person doesn’t have to worry about your payments changing.
Variable Rate Loans:
The interest rate on variable-rate loans are tied up to a benchmark rate that are set by the banks. That depends on how the bench mark rate fluctuates, the rate on your loan, your monthly payments and also the total interest costs may fall or rise with these loans.
One benefit is the variable rate carries low APR than fixed-rate loans. They might also carry a cap that how much rate will change over a specific period and over the life of the loan.
A variable-rate loan can make sense if your loan has a short term repayment term, as the rate may rise but are unlikely to surge in the shout-term.
Personal Line of Credit:
A personal line of credit is resolving credit, more similar credit card than a personal loan. Rather than getting a lump sum of cash, you can get access to credit line from which the person can borrow on need basis; you only have to pay for what you are borrowing.