Types of Secured and Unsecured Personal Loans
Personal loans are offered to individual borrowers rather than companies and corporations. Financial institutions such as commercial banks, credit card companies, savings and loan associations, and credit unions offer financing. Loans come in the form of unsecured and secured debt.
Also called signature loan, unsecured debt comes with a higher interest rate and shorter repayment term. Because financial institutions face a higher risk, it is more difficult to meet the lending criteria. Likely candidates have very good or excellent credit and substantial income, be it salary, rental income, dividends, interest received, or savings. Other sources of income include disability benefits, sale of principal residence or real estate, and portfolio income.
There are two major types – revolving line of credit and fixed-interest installment loans. Credit cards, medical bills, and auto, student, and payday loans are categorized as unsecured debt. There are different types of credit cards, including no annual fee, rewards, low interest, and department store credit cards. They are offered with different perks such as concierge service, insurance policies, extended warranty, free airfare, and hotel stays. Some issuers also feature discounted purchases, flowers, movie tickets, and more. Discounts may not be available for internet purchases. Many credit card issuers offer roadside assistance, including breakdown towing, lock-out assistance, fuel delivery, and flat tire changes. Hazard weather services, emergency accommodation, and car rental are also offered.
Auto financing is another type of personal loan offered by financial institutions and car dealerships. The money can be used to purchase a new or used vehicle. This type of financing is offered to borrowers with good or tarnished credit, but in the latter case collateral is often required. Student loans are another variety, offered by financial institutions and government authorities. The money is used to pay tuition and board, textbooks, school supplies, and other expenses.
Personal loans also come in the form of secured debt whereby borrowers pledge a valuable asset as collateral. There are different types of collateral, including vehicle, real estate, jewelry, money in a savings account, and home equity. Whether an asset is liquid and how much it costs determine the amount of financing, the interest rate, and the terms.
There are different types of secured debt, including mortgages, repossession, non-recourse loans, and home equity lines of credit. Mortgages are the most common type of secured debt, which is backed by some real estate property. They come with a lower interest rate because banks face a lower risk when collateral is pledged. This is long-term financing, with repayment terms of 15, 20, or 35 years. There are different types of mortgages, including adjustable rate, fixed rate, interest only, and balloon loans. The 2-step mortgage comes with a floating interest rate. The rate remains the same for a specified period and then adjusts. The borrower can choose from a fixed or variable interest rate.
Other types of personal loans include multiple term, open and closed, and 6 month convertible mortgages. A secured line of credit is yet another variety. The money is used for car purchases, home improvements, investments, and other purposes. Lines of credit are offered with a low interest rate, but there are legal and appraisal fees. Financial institutions usually offer up to 80 percent of the value or purchase price of the real estate property. Up to 90 percent is offered for second mortgages.
Consumer debt is money owed as a result of buying services and goods. These items don’t bring profit and are consumed. Unlike mortgages, the interest payments on consumer debt are not tax-deductible. Consumer debt allows borrowers to pay their ongoing expenses (rent, phone and electricity bills).
Unsecured loans are offered to trustworthy customers with a good payment and credit history. There are income, age, and other requirements to qualify. Applicants should be of legal age, and financial institutions request a photo ID, driver’s license, passport or another document to prove this. The.
A secured loan can take different forms – mortgage, non-recourse loan, title and secured car loans, and pawnbroker loans. The main difference between unsecured and secured debt is that the latter is backed by some valuable asset, known as collateral. There are different types of collateral.
The term unsecured debt refers to a loan offered by a financial institution and not backed by collateral. If the borrower is unable to keep up with payments, the bank has to file a lawsuit to get the money back. Financial establishments face a higher risk when the loan is not backed by some asset.
Different Types of Personal Loans
Money always plays the most important role in human lives. The desire to fulfill personal needs come to everybody’s mind but affording for that is not always possible. But in a country like India, that can’t be a barrier to fulfill your and your family’s desires. Because, there are hundreds of banks and other financial organizations in the country who provide loans for personal reasons. These kinds of loans are known as personal loans. India is situating on one of the top positions in terms of providing these types of loans.
Personal loans are simply those retail loans which are provided for the purpose of fulfillment of personal needs and expenses of individuals (prospective loan borrowers). The personal loans in India primarily are provided under five major categories. Though the loan amount and the rate of interest vary from bank to bank, but the purposes of providing these loans are same. Apart from the personal purposes, if someone possess the desire to establish his own business then also the Indian banks always welcome by providing the business start-up loans. Here, we will discuss about these kinds of loans.
Consumer Durable Loans : – These kinds of loans are being provided for purchasing consumer durable products like television, music system, washing machines and so on. These are one of the unique kind of loans that are provided by the Indian banks to attract more and more people towards them. Under this category of personal loan, you will get an amount ranging from Rs.10,000 to Rs.1,00,000. But there are several banks which provides a minimum amount of Rs.5,000 and the maximum amount of Rs.2,00,000 under this loan. Banks provide this loan for maximum of a time period of 5 years.
Festival Loans : – This kind of personal loan is provided to help people to fulfill their personal and family’s desire during the festival time. Usually, leading banks of India provide this loan on the festive season at cheaper or discounted rate. This is the best type of loan for those people who want to avail a small amount of loan. Under this category of loan, banks do provide an minimum amount of Rs.5.000 and you can get an maximum amount of Rs.50,000 under this type of loan. But the festival loan is restricted up to 12 months. Repayment is to be done by equated monthly installments (EMI). The rate of interest on this loan varies from bank to bank.
Marriage Loans : – Nowadays, this type of personal loan is equally getting popular among the people of urban and rural sectors. The loan amount depends on various factors including age of the applicant, security pledged by the applicant (if secured loan), repayment capacity of the applicant etc. Under the marriage loan, the rate of interest is governed by the prevailing market rate at the time when the loan is disbursed.
Pension Loans : – There are several banks in India which take care of the old aged people as well. That’s why the people who have retired from their jobs will also be able to avail personal loans. This type of loan is called a Pension loan. Under this kind of loan, the banks provide the maximum amount which is up to 7 to 10 times of the amount which was received as the last pension.
Personal Computer Loans : – In this age of Information technology revolution, having an owned computer almost becomes a necessity. There are several Indian banks which offer loans that fulfill that desires of people. Under this category of loan, up to Rs.1,00,000 of amount can be borrowed. Banks also provide separate loan for purchasing of software and that can be provided up to an amount of Rs.20,000. The rate of interest is being charged according to prime lending rate and there are some banks who charge extra 2% on the loan amount.
Types of Personal Loans in San Jose
There are many different types of loans that suit many different situations and San Jose residents will be able to find a loan for any reason. If you need cash, you will need to consider the personal loans San Jose has to offer. You can find secured loans and unsecured loans, and you will need to choose the one that best suits your needs and repayment abilities.
Banks offer personal loans and many people favor applying to a bank for a loan for their safe and reliable service. When applying for personal loans San Jose banks will require you to undergo credit testing, employment checks and other financial background checks. The application process is thorough and can be long, with a high rate of rejection, although you can receive large loans if approved.
Credit unions are like banks that are owned by their members. Credit unions can offer personal loans in San Jose and you may be able to negotiate a loan deal that is more suitable for you than through a bank.
If you are looking for a small, short-term loan, a payday loan may be a solution. The loan amount is calculated according to the size of your paycheck so the amount you can borrow is limited and they are very short-term loans, but if you are looking for an immediate boost to your finances, this may be suitable. They are particularly suitable for people with bad credit as there is no credit check. These loans are also quick and simple and can be applied for online for maximum convenience.
Car title loans are personal loans San Jose residents may be eligible for. They are suitable for residents of San Jose who own a car with the loan amount worked out according to the value of the car. The loans are secured making them more flexible and suitable for a wide range of applicants including those with bad credit, no employment and no bank account. They are also convenient with an online application form, instant approval.
Peer-to-peer loans are suitable for people who need a personal loan, but may not be able to get it from a bank or other lending institution. It is an online platform that matches you up to an individual that may be able to offer you a loan.
Call now to be transferred to Montana Capital
*EFFECTIVE 8/22/16, MONTANA CAPITAL CAR TITLE LOANS WILL BE FUNDING NEW LOANS FOR QUALIFYING APPLICANTS WHO ARE SEEKING LOANS FROM 5 STAR LOANS, 5 STAR LOANS WILL NO LONGER OFFER NEW LOANS OR REFINANCE EXISTING LOANS, AND ALL CALLS TO (888) 309-0994 WILL BE TRANSFERRED TO MONTANA CAPITAL CAR TITLE LOANS FOR RESPONSE.