Everybody needs money for some reason or other. Some people need it fund their business while others may require it for various personal expenses. Whatever could be the reason, the best way to get money is taking a loan from a financial institution, bank or any other similar organization. But the question is what kind of loan you should be getting? There are different types of loans that you should know about before deciding to apply for a specific type.
Once you manage to know different types of loans described below, then you would be able to go for a distinct loan option as per your need and preference. Keep reading to explore these loan types.
Based on Security Provided
- Secured loan
In accordance with security provided, the first type of loan is secured loan. Secured loans are those loans where you need to pledge some collateral to borrow the loan from a bank or other financial institution. In case you fail to repay the loan amount within the loan period, the lender is supposed to sell the collateral to get their money back. You can really go for such Loans.
- Unsecured loan
The second type of loan is unsecured loan where you are not supposed to put any collateral to get this loan. In this regard, the bank or the lender either checks your credit history or your past relationship with the lender before approving the loan.
This loan is known to be unsecured as there is no security is put. The interest rates for these kinds of loans are supposed to be higher for the obvious reasons. Finding some DSA Partners would be beneficial for you to get some unsecured loan approved.
Based on Purpose
- Education Loan
As the name suggests, this loan is taken to fund someone’s education. There are several terms and conditions that one needs to abide by to get this loan approved. Different kinds of education loans are there. Some loans are for undergraduate degree or some for postgraduate or some for some other course.
- Personal Loan
This is loan is borrowed for personal expenses. The purpose of taking this kind of loan could be anything such as building a house or some medical emergency or anything else. This loan is basically approved on the basis of the past relation between the lender and the loan applicant. This loan is considered to be the most sought-after out there. So many people tend to go for this type of loan.
- Vehicle Loan
Vehicle loan is another type of loan that is used to purchase or repair vehicles. This type of loan is mainly taken by an applicant to fund either a 2 wheelers or a 4 wheeler vehicle. There are several factors that determine the loan amount such as your credit score etc.
The lender is to have the discretion to decide on the loan amount. In most of the cases, this kind of loan is not supposed to provide 100% financing to help you purchase the car. Knowing all the terms and conditions is important before applying for this loan.