All of us like to have luxuries in our lives. But what in case you are from a middle class background and cannot afford them. In some cases , you may suddenly need money for an emergency situation. You may need additional money to run a program like a wedding or meeting. I am positive you would have experienced these kinds of situations in your life or you may experience them finally.
In situations like this in life, you need to take a personal loan to meet these unexpected expenses. To help you out with personal loans in this editorial I will be speaking about the different types of personal loans. This way, when you take a personal loan the below information will come of use to you. Now, there's four types of personal loans that are categorized on the basis of loan amount, time period, and rate of interest.
These four types are secured loan, unsecured loan, and line of credit. Let us have a glance at them in detail.
Secured loan: This loan comes with some kind of pledge against the money in which you will must pledge an asset like a automobile, jewelry, or home in the type of security. This ensures that you will pay the loan on time. You can basically avail this type of loan as banks and plenty of money lenders issue this loan as they possess the documents in case of default on the payment. The rate of interest in a secured loan is low when compared to an unsecured loan.
The main issue with this type of loan is that in case you fail to repay, the bank or money lender has all the rights to repossess the security what you have pledged.
Unsecured loan: Like the name goes, this loan doesn't need you to give any kind of security against the loan. You can get an unsecured loan only for small amounts and it is issued only in case you have a lovely credit. Since there is no security with the bank or money lender, the rate of interest is higher than that of a secured loan.
Line of credit: In this type of loan, the bank or money lender offers money that you can use for a specified time period. You can withdraw up to the maximum limit in the work of the specified time period, depending on your need and requirement after which the amount of credit is determined. This type of loan can be secured as well as unsecured and the best part of this loan is that the interest is paid only on the money actually withdrawn.
There you go, now you have four choices which you can make according to your needs.
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