Friday 8 March 2013

Various Types Of Loans For Your Financial Needs

By Lauren Davis


These days, it is a common practice for a lot of people who experience financial setbacks to depend on credit or loans to fund their daily living needs. Yet, applying for a loan requires thorough consideration and prudence. Getting a loan impulsively without studying important factors like payment terms and interest rates can bring further stress and financial constraints eventually to the borrower. Hence, it is crucial to remember that getting a loan must only be an option in times of emergency and not a steady solution to financial needs.

You can apply for various types of loans based on your needs. For example, if you need instant money to pay for your child's tuition, to cover an ailing father's medical expenses, or simply to buy groceries for the family, a personal loan is just right for you. If you're an employee who keeps a regular job, you can also avail a payday loan. A home loan is the solution if you need to purchase or repair your home, and a car loan to purchase your own car.

Secured And Unsecured Loans

There are two general types of loans offered by different lending companies today: the secured and unsecured loans. The first type is considerably better but harder to obtain. Though they come with lower interest rates, these loans require one to have a good credit history and employment records. Having collateral of any form is also often necessary when applying for a secured loan. The collateral is for the purpose of mitigating the risk on the part of the lender.

On the other hand, unsecured loans can be obtained even in one day, providing all the necessary documents are submitted. An applicant who cannot apply for a secured loan because of bad credit history usually resorts to unsecured loans. But compared to secured loans, unsecured loans pose a higher risk on the part of the lender, and thus come with higher interest rates.

Payday Loans For Employees

Today, many lending agencies especially those that operate online provide Payday Loans to people who are in need of instant cash. A payday loan is also called cash advance. When applying for this, you need to present your ID card, proof of income, and employment records to the agency. Bear in mind that this is an unsecured type of loan. Thus, you would only have a limited time to repay it, which most likely would be on your next payday. It also comes with a higher interest rate.




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