Personal loans allow individuals with poor financial liquidity to breathe easy with regard to unforeseeable emergencies. The reason for this is that a personal loan can be crucial for a quick cash infusion for a wide variety of purposes. In fact, there are a wide variety of personal loans for a wide variety of situations. Consider the various types of personal loans that are available to an individual in the country.
1. Secured personal loans:
A secured personal loan is one where the money borrowed is backed by collateral. This means that if the borrower is unable to repay the borrowed money then his collateral can be used to recoup the money.
2. Unsecured personal loans:
Unsecured personal loans are exactly the opposite of secured personal loans in that they do not require any collateral. These types of loans are usually based on an individual having a good credit history. As there is no collateral, these types of loans carry higher interest rates and, in order to recoup the borrowed money, the lender can start legal procedures.
3. Home equity personal loans:
Home equity personal loans are based on the borrower having enough equity on his home. These types of loans would qualify under the category of secured personal loans and, hence, would carry low interest rates with more free limits on the amount of money that can be borrowed.
4. Home equity line of credit:
Home equity line of credit is similar to home equity personal loans with the minor difference that the money borrowed would be given in a staggered basis. These types of loans provide the borrower with the freedom to use his money as he chooses, to only pay interest on the money drawn, and to have only low interest rates.
5. Short term personal loans:
Short term personal loans, as the name suggests, are personal loans that are only taken out for a short period of time. These types of personal loans are usually very small in amount and carry with them high interest rates because the repayment schedules are short.
6. Fast cash advance loans:
Cash advance loans are also known as payday loans because they are taken out against the borrower’s next paycheque. These types of personal loans come with extremely high interest rates, need to be paid back quickly i.e. after a few days or weeks and have a very simple application process and approval criteria.