Are you looking for way to pay doubt your health debt, cover the cost of a car repair or pay for your wedding? If you want to cover your current bills, a personal loan can be a quick source of cash.
A personal loan is one of the most popular of loans. Typically, it has lower interest rates compared to credit card or credit cash advance. This type of loan has become a fast-growing financing option for consumers, and demand continues to rise.
There are two types of personal loans: secured and unsecured.
A secured loan is a loan that is backed up by an asset; this asset is called as collateral. Normally, collateral comes in a form of home, land, or car. These assets serve as a guarantee that if you default on the loan, the lender can take the asset. Typically, a secured loan offers lower interest rates and overall loan terms.
On the other hand, unsecured loans have no collateral, but if default occurs the bank can take legal action in hopes to recoup the money. They have higher interest rates and often poor loan terms due to the fact that this type of loans tends to be riskier.
Both types of loans are taken out for a set period of time and have a fixed monthly repayment schedule. For some, they seek for an accountant to help them decide which type of loan is better for them.
The interest rate is the largely determining factor when deciding whether a personal loan is a good fit for you or not. Most times the interest rate is determined by your income and credit score. The higher your combined credit score and income the lower the interest rate. Moreover, interest rates may vary by state and bank, making it important to shop around for the best rate.
Personal loans are a great solution to settle your financial obligations. However, just like any other type of financial decision, you should also consider its cons.
For more on personal loans, read this: https://www.moneysmart.gov.au/borrowing-and-credit/other-types-of-credit/personal-loans