Personal loans are the types of loans that can cover your all type of financial situations. Whatever you need- there is a one-stop solution, personal loans. As everybody is aware of the fact that personal loans can be used for any purpose. You just name it and a personal loan will cover it for you.
So, there are 4 types of personal loans that you can choose from:
Unsecured personal loans: This is the most popular type of personal loan. Many people are aware of unsecured personal loans. As lenders approve your unsecured personal loan on the basis of your credit score. A good credit score is the priority of lenders. Then it is a win, win situation for you as you will be able to have a lot of benefits due to a high credit score like you will get lower interest rates on the loan amount, your loan will get approved faster and easier. But as you know there is no presence of collateral in the case of unsecured personal loans. So, lenders are at higher risk. They compensate for this situation by offering a higher interest rate. So an unsecured personal loan has both, pros and cons.
Secured personal loans: Many people are not aware of the secured personal loans. In the case of unsecured personal loans, you can pledge any of your assets as collateral like your personal vehicle, you any saving mode like fixed deposits, shares, debentures, etc. As there is a presence of collateral in the case of secured personal loans so lenders are at a lower risk and they will offer you a lower interest rate. Also if you will become unable to repay your loan then they will seize your collateral. Also in the case of secured personal loan credit score does not play a major role. So lower credit score will also lead you to have many benefits.
Fixed-rate personal loan: In this type of personal loan you will have to pay a particular fixed amount per month as your EMI and there will be no variations in the amount throughout the loan tenure. This means a fixed amount will get deducted from your bank account. Which will be included the loan amount along with the interest amount as well. The fixed interest rate option is available in both unsecured and secured personal loans as well. If you are paying the fixed amount every month then it will help you manage your monthly budget. Will help you to plan your expenses accordingly and many more things. But the fixed amount will get deduct whether you will get your income or not.
Variable-rate personal loans: If you will choose this option then this option can be beneficial for you some time. And can make you pay higher for some point in time. According to this option, the interest rate of the loan gets fluctuating with time. So you will need to lower interest amount if the interest rate will get decrease and if the interest rate will increase you will need to pay a higher amount as interest amount. So sometimes this method can save you money. And sometimes it can make you pay a higher amount. This is not a much beneficial method due to the uncertainty of the interest amount. You will not be able to plan your monthly budget and your monthly expenses as well. Many banks and NBFCs like Jana Small Finance Bank Personal Loan, etc. are the legal companies from which if you will have the personal loans then you will be able to have many tax benefits.
The personal loan itself comes with many advantages like no collateral need to be pledged, access to the lower interest rate if having a higher credit score, fast processing, a long personal loan list to choose from, etc. You should use the personal loan EMI calculator to know the amount of EMI you need to pay the toll is available online as well. It will help you to know the interest amount beforehand. Which will help you have many benefits.
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