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(New page: What Are the Common Kinds of Personal Loans A lot of different personal loans meant for different uses and requires are now being offered by banks. You will find mortgage loans, advance...)
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What Are the Common Kinds of Personal Loans
A lot of different personal loans meant for different uses and requires are now being offered by banks. You will find mortgage loans, advanced loans, auto loans and emergency loans. However, there are three general types which are also the most often availed by clients.
Unlike other types which require particular documents matching specific purposes (mortgage loans, for example, need corresponding appraisal in worth of the desired house and lot), these three kinds of personal loans cover a wider scope of generic purposes which mean less scrutiny upon credit investigation.
1. Secured Personal bank loan This type of loan offers security for the lender. This is availed in exchange of collateral, such as vehicles like cars, boats or motorcycles, and properties like house and land. Banks require the borrower to prepare property titles that will stick with the lending company before the loan amount is paid off.
Although many documents are required, it is still simpler to process as not one other investigations is going to be done. The transaction can be finalized to as fast as one day. If you are targeting smaller interest rate, then this most closely fits you. Aside from using a higher borrowing limitation, banks are also more amenable when processing this loan because they may give more flexible payment scheme, lower monthly due and more perks, like free services and more lenient conditions.
Around the downside, as your collateral is being kept by the lending institution, the risk of losing your property is very high especially if the signed contract isn't met.
2. Unsecured Personal Loan This type of loan doesn't depend on collateral but on good credit rating and capability to pay. However, this often takes a co-signer or co-maker to back-up the borrower. Only smaller amount can also be allowed by the bank to match the potential risks involved. Flexibility in payment scheme is not as likely to become awarded.
For borrowers who are less confident on their own payment capabilities, this is the perfect choice.
3. Credit line This kind of personal bank loan is actually what most credit card companies and banks do. They allow their clients to use credit lines up to the agreed limit then the customers just pay for them according to the signed terms. Once paid, the procedure can begin once again with increasing borrowing limit every time prior dues are settled. However, most credit card issuers do not let conversion of credit lines to cash.
