A Guide to Understanding Different Types of Personal Loans

A Guide to Understanding Different Types of Personal Loans

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We all need a little financial help now and again, and a personal loan could be used for many things; furthering your education, buying that dream car, or the ultimate laptop computer you’ve been dreaming of. The term ‘personal loan’ is a broad description, and here are a few of the loan packages you can find with online loan providers.

  • Unsecured Personal Loan – This is a personal loan with no security, as in the borrower is not putting an asset forward as a guarantee for the loan. The lender will base their decision upon the borrower’s credit history, and if you have a less than perfect credit score, there are personal loans for bad credit from Debt Fix, Australia’s leading online loan provider.
  • Secured Personal Loan – If, for example, you have some equity in your home, you could use this as security for a personal loan. Secured personal loans usually offer slightly less interest than an unsecured loan, as the risk of defaulting is considered to be less. The asset(s) used for the loan would be forfeited, in the event, the borrower defaults on the loan repayments, and for most people, obtaining an unsecured personal loan is preferred, especially with online loan providers who offer very efficient service.

A Guide to Understanding Different Types of Personal Loans

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  • Debt Consolidation Loans – If a person has several lines of credit and finds it difficult to make the payments every month, they can apply for a debt consolidation loan, which enables them to pay off all their debts and have a single monthly repayment that is affordable. This is an ideal solution for someone with multiple credit card bills that are outstanding, as the interest will not keep growing if the debts are all repaid.
  • Personal Line of Credit – While this is not a straightforward loan, a person with a credit card has a line of credit which allows them to purchase items or pay for services. This works fine if the cardholder pays the balance at the end of the month, but in some cases, multiple lines of credit can put a person into debt. One must exercise a degree of self-discipline when holding credit cards, otherwise one can find oneself in deep water.
  • Pawn Shop Loan – You might have a valuable watch or item of jewelry, and by taking this to a pawn shop, you can borrow money at an agreed rate of interest. Should you default on the terms of the loan, the pawn shop will take possession of the asset.

Should you require a personal loan, an online search will put you in touch with an online loan provider who can help you obtain a loan, even if you have a bad credit history. The application process is easy, and after filling in the online form, you will receive pre-approval within minutes, and for most customers, the funds are in their account on the same day.

A Guide to Understanding Different Types of Personal Loans

Image Source: Pexels

The online personal loan application has never been easier, and with competitive rates of interest, you can borrow as much as you need.

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