If you are planning to apply for a personal loan, it is prudent to understand the kinds. This will enable you to find the best matched loan for you. There are secured and unsecured loans. It can definitely help you if you know what's good and what's not with the kind of loan you are planning to secure.
Short-term personal loans, secured personal loans, high-risk personal loans, student loans, military personal loans, auto loans, signature personal loans--all these are available to an individual who is looking to borrow money between one and five years. As of the moment, there are two kinds of loans for personal use.
Secured Loan: Here the loan involves the attachment of collateral--say, your property or any fixed/movable asset--against the sum of money borrowed. You risk losing your home should you fail on repayments.
Unsecured loan: There's no need for any collateral if you're borrowing an unsecured loan. However, you can anticipate for a higher interest rate because of the higher risk involved. Here, failure to make constant payments would see the lender fall back on the credit agreement and resort to legal claims to make good the loss incurred.
When you apply for either of these secured loans, you can expect the lender to perform a credit worthiness investigation on you before he actually approves you the loan. There are many reasons why you can be rejected of loans, like accumulating mortgage interest, too many default payments, or even the cancellation of your credit card. Nevertheless, if you are approved, then do avail of a protection policy that can pay your debt in full just in case you really can't.
Other loan types are:
1. Short-Term Personal Loans
There are several sources for unsecured personal loans. Normally, interest rates are high in these kinds of loans. This is because the duration of repayment is typically for a short time. Such kinds of short-term personal loans have to be beneficial to both the borrower and the lender, and high rates of interest are one of the ways by which a bank or a financial company stands to benefit.
Internet lending companies only conducts a thorough credit investigation but only a small amount may be given.
Because of the negative and positive factors of short-term personal loans (like student loans), it is recommended that the individual does his research thoroughly before he applies for funding.
2. Fast Payday Loans (Fast Cash Advance Loans)
Unexpected dilemmas involving money can happen. They may come in the likes of surmounting bills and car repairs. In case you do not have the extra money to meet these unexpected costs, you could really think of applying for a cash advance.
Payday loans are perfect solutions for fast money needs since it is easier to get one, plus there is always a huge opportunity that you could qualify. But expect to pay the loan just as your paycheck arrives. To become part of it, you must be at least 18 years old and working, with permanent salary. This will guaranteethem that you can indeed pay the loan.
One of the advantages of the fast cash advance loan is the $1,000 along with the cash advance itself. If you're fortunate, the company may even give you something higher.
A normal cash advance loans is paid within two weeks. Nevertheless, some companies are understanding enough that they're willing to extend your payment period to 30 days provided you pay half of the amount in two weeks. These loans are known as 30-day payday loans.
Not all agencies offer 30-day payday loans or long-term cash advance, so select your company wisely. Far better to enter into a long-term loan agreement, before taking the loan; otherwise, you would have to pay additional interest and fees for the late period.
3. Military Personal Loans
Servicemen can enjoy military loans whenever they want to. Army military loans are offered by military loan companies to help servicemen to buy a home or a car or any other requirement that requires higher costs. These agencies offer varieties of loans, for example, bereavement loan, career service loan, disaster relief loan that are easy and at the same time affordable. One benefit would be the low rate of interest.