There are many circumstances when we need ample amount of money to meet the day to day requirements, then we instantly think of loans. There are several types of loans available in financial institutions that can match one’s need. A little information on loans can help you a lot while opting for a loan in times of emergency. There are several categories of loans that are provided by financial institutions at different interest rates.
Unsecured loans: These loans are helpful for those who need urgent cash. Such loans can be borrowed by any person irrespective of their credit status. The process for getting money is hassles free and this is a kind of short term loan. As these loans are unsecured in nature so no security is required. The interest rate of this kind of loans are higher as it involves higher risk than other types of loans. The payday loan is an example of unsecured loan.
Secured loans: These loans are where an individual has to use their property as security against the loan. The amount to borrow money varies from person to person according to needs. This type of loans involve long approving process. There are easy terms and conditions for repayment of money. These loans are available with low monthly installments and low rates of interest. The period for repaying the borrowed money can be lengthy according to the individual’s ability which was set at the time of lending. These loans are very advantageous at the same time as they also involve the risk of losing property if the borrowers are not able to pay money within the definite time period.
Debt Consolidation loans: The principle of debt consolidation loan is based on the repayment of many smaller loans that one may have accumulated over the years. This loan has been designed for people to clear out their old debts. So, one gets an option of mixing all old debts into one and paying the interest rates of only one loan. These loans are available both in secure and unsecured form. Secured loan requires to submit collateral to the lender. But unsecured loan requires no such collaterals to submit.
Business Loans: In business nothing is predictable. But one has to be ready for any kind of emergency. To meet such requirements, business loan is available. There are two type of business loans, secured and unsecured. In secured loans you have to place some security and avail the advantage but in unsecured loans if you don’t have any security to place even then you can get a loan but with little higher interest rate.
Home Equity Loans: Since, one pledges the equity value of one’s home as security against the loan amount as a result this loan is secured in nature. This type of loan is a kind of second mortgage from which individual can derive a fixed amount of money and that has to be paid within a specified amount of time. It has another advantage, as per the income tax law the interest paid is tax deductible.
Education Loans : By these loans one can easily borrow money to meet the study expenses. They can be repaid once you have completed your studies and after finding a suitable job. The interest rates are kept affordable for the benefit of the students. Education loans are provided by various financial institutions.
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