Choosing the best type of personal loan for you?
You plan to make a major purchase or enjoy holidaying at some exotic location but do not have enough funds for it. Taking a personal loan might be just the right thing for you then.
Primarily, it is the flexibility, in terms of how the loan amount can be used, which makes personal loans such a preferred choice. Buying a luxury item, paying medical expenses, college fee or any other outstanding debts are some other reasons why people might consider applying for a secured or unsecured personal loan.
Secured loan can be taken by an individual against any asset he owns. It is aptly called secured loan because the lender is rightfully entitled for taking possession of that asset in case of non-repayment of loan. This is the reason that secured loans are easier to get at lower interest rates, even for people who have less than perfect credit rating.
Unsecured personal loans, on the other hand, although does not require you to use any assets as collateral but the rate of interest is generally high. Besides, the paperwork and time involved in getting an unsecured loan is also more, which can prove problematic if you need money urgently. There is no chance of losing an asset in case of not repaying the loan in time; however it can reflect badly on your credit score.
Once you have carefully assessed your financial condition and requirements, as well as understood the pros and cons associated with both these types of personal loans, you can definitely make a much better and well informed choice.