 Security
Secured loan - a secured loan is one in
which the borrower pledges an asset as collateral or security for
the loan. As the loan is secured, the lender is relieved from
financial risks involved, he may offer attractive terms for the
borrower on interest rates and repayment period.
Unsecured loan - this when a borrower
accepts a loan without any collateral. This type of loan will
generally face much higher interest rates, and is intended for short
term purposes.
Types of Loans
Equity Loans
An equity loan is a mortgage
placed on an asset usually property in exchange for cash to the
borrower, that is why it is often referred to as an home equity
loan. They are a secured type of loan.
Personal Loans
An unsecured loan based on a consumer's
income, debt and credit history.
Payday Loans
An
unsecured, short-term cash advance until your payday.
Auto Loans
A loan used to assist someone
in the purchase of a vehicle. The loan is secured by the actual
vehicle.
Student Loans
Student loans are loans
offered to students to assist in payment of the costs of education.
Business Loans
This is a loan used to
start or grow a business, usually issued from a bank.
Bank Overdrafts
An
overdrawn balance on cash at bank account.
Loan Sources
Banks
Banks are by far the common
lenders. They will offer competitive interest rates, but will
generally require more security, or better credit ratings before
they lend money. They don't need your business, so will only lend
you money when they know they can get their money back one way or
another.
Loan Companies - they generally charge
higher interest rates, but is easier to get a loan in most cases.
Some loans companies even specialize in bad credit loans if you have
a bad credit history.
Online Loans - these are just loans
companies offering you an easy way to apply online. They can offer
competitive rates as they generally have lower operating costs.
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