|Personal Loan Types
18 June 2010 - Which Way To Pay
Personal Loan Types
Before you get going, first you need to decide a few basic factors. These include:
- How much do I need to borrow?
- Could I handle this expense without taking a loan?
- What are my existing financial obligations (credit cards, other loans)
- What do I stand to lose?
- Who relies on me (family, loved ones) financially?
It is important to factor a loan into all of the other obligations you have – including your regular utility bills, college fees and a home loan or credit card.
There are broadly two main types of personal loans – secured or unsecured.
Unsecured is generally the best option for people who need to borrow smaller amounts and cannot risk their personal property – this is because they are not balanced against collateral from yourself (such as a house). A secured loan is better for large borrowing amounts and carry the risk that if you are unable to pay back the loan, you could lose a valuable asset.
There are secured loans which are secured against smaller assets such as a car or truck, but they still carry that element of risk. To get the best from them, you really should plan ahead with your repayments and figure out how you will manage the loan for the full term – not just the short term.
Always take your time and evaluate your personal circumstances before taking any loan product.