A loan is known to be a borrowed amount from a bank or other non-banking organization during your emergency. After taking the loan, you are supposed to repay the loan within the specified loan repayment period. There are different types of loans that you consider going for. A few of the loan types are described below for your knowledge.
The first kind of loan is an unsecured loan. There are several subtypes of loans that come under the unsecured loan. In the case of an unsecured loan, you are not required to put anything as collateral. But certain factors will determine whether you are eligible for the loan or not, such as credit score or history. A few of the unsecured loans are given below.
- Personal Loan
You can take a personal loan to bear any emergency or sudden expenses like education, marriage or some medical expenses. This is the most popular loan type, as the applicant gets the liberty to use the money in whatever way they see fit. As it is an unsecured loan, the interest rate is known to be higher for obvious reasons. You can meet some DSA Partners to get the necessary guidance on taking a personal loan.
- Small Business Loans
If you are starting a small business but lack funds, you can apply for this loan. A business loan proves beneficial for an entrepreneur or businessman as it provides a customized solution for a business. The best benefit of this loan is that it gets credited to your account quickly once all the paperwork is done.
Secured loans are those loans where you need to put some of your assets as collateral. Your asset is being used as a security in this regard. Upon failing to repay the loan within the specified period, the bank is supposed to sell or auction your asset to recover the loan amount. This loan is offered with lower interest rates as your asset is put as collateral.
- Home Loan
A home loan is the most common secured loan where you get the bank funds to purchase your home or property. In most cases, the bank is supposed to pay 80% of the total cost of the property or home you wish to buy, and the rest is required to be paid by you. Once you submit all the required documents, the bank is to approve your loan request. Most people who cannot afford a home go for a home loan.
- Loan Against Property
In this kind of loan arrangement, you are supposed to use some of your property as collateral and get a specific amount as a loan from the bank. In most cases, around 60-70% value of the cost of the property is given to you by the bank. You have the option to negotiate with the bank regarding this matter.
All the loans fall under either the secured or unsecured loan category. Before you choose to go for a specific loan, you must know whether it is unsecured or secured. Moreover, knowing the terms and conditions of the loan is also important. This is how you would be able to make the most of it.