There are several instances in life when one may need to borrow some money to deal with situations like a medical emergency, financing a purchase, and paying bills and tax dues. As each loan offers unique benefits, it is important to familiarize yourself with the different types of online loans to make sure you go with the best available option. Let’s take a closer look at five types of loans that every borrower should know.
1. Secured Loans
Secured loans refer to a loan that has been borrowed by putting up something as collateral such as a home or a car. The arrangement offers lenders a secured way to cover any potential loss, and as a result, they offer such loans at a much lower interest rate. If you think you can pay back the loan on time and are comfortable putting up something as security, secured loans are an excellent choice.
2. Unsecured Loans
Unlike secured loans, you can apply for unsecured loans without putting up anything as collateral. While such loans are majorly meant to deal with high-interest bills and dues, you can also use the funds for major expenses like financing a new house or buying a car. As lenders don’t ask for collateral for such loans, you must have a good credit score and history to meet the eligibility criteria. In addition, a high credit score helps you bargain for better loan terms.
3. Payday Loans
Payday loans are short-term loans that are majorly due for repayment on the borrower’s next payday. You will be asked to sign a postdated check or authorize the lender to deduct the loan amount along with the charges and interest on your next payday. While most lenders prefer lending ₹50,000 or more, payday loans are a viable choice if you are in urgent need of funds and don’t have any other option available.
4. Title Loans
Title loans allow you to borrow money from lenders in exchange for the right to claim the title of a specific possession like your car or home if you fail to pay back their dues. The amount you can borrow is generally around 25% to 50% of the value of the property you put up, while the loan must be repaid in 15 to 30 days. If the loan is approved, you lose your car’s title until you can pay back the owed amount.
5. Home Equity Loans
Home equity loans refer to loans where a borrower must put up their home as collateral in exchange for a specific amount of money. The amount you can borrow majorly depends on the equity in your home and can be anything below 85% of the market value of the equity. As you put up your house – a major possession – as collateral, lenders allow you to borrow money at much lower interest rates than with unsecured personal loans.
Before you apply for an online loan or any other type of loan, you must know the differences to choose one that appeals to your needs. When looking for easy online loans, leading providers of personal loans such as KreditBee have got you covered. When you opt for an online loan, you can apply in a few easy steps and approval in no time. To get answers to all your questions about online loans, fill out our Contact Form or give us a call at 080-44292200. You can also email [email protected] and our team of online loan experts will get back to you at the earliest.