There are various financial institutions offering varied range of loans. But you need to do a lot of research work before selecting the best possible deal that suits your needs. There are a few eligibility criteria for applying for personal loans. People who can apply for loans are the salaried staff as well as the self employed professionals. Other necessary fields that are taken into consideration includes, age, residential proof, employment details and your credit history.
Personal loans offer two types of interest rates: Fixed Rates and Floating Rates (also referred to as Adjustable Rates). In a fixed rate loan, the interest rates remain fixed till the end of the loan tenure. It is not affected by any significant changes taking place in the economic market. Whereas, floating rates often increase or decrease based on the current market rate.
Types of personal loans:
There are basically two types of loans. Secured loans and unsecured loans.
Secured Loans: In a secured personal loan, you are required to pledge your property as a guarantee against the loan amount that you have applied for. The property might be in the form of your home, car or any other tangible assets that a financial institution will accept while granting you with the loan amount that you require. You should bear in mind that the value of the property which you have decided to keep as collateral, is equal or more than the value of the loan amount that you have applied for. In most of the cases if you are opting for a secured personal loan, there are chances that the financial institution might provide with the option of paying back the loan amount at a comparatively low rate of interest. Incase you become a defaulter while repaying the loan; the financial institution will have the authority to seize your property and sell it off to acquire the money.
Unsecured Loans: While opting for an unsecured loan, you need have to pledge any of valuable assets. Unsecured loans are sanctioned based on the borrower’s credit history. If you have a good credit rating and paying your bills on time without being a defaulter in any of the months, you can easily acquire an unsecured personal loan. Even if you have a bad credit history, still you can apply for an unsecured loan. It gives you a chance to improve your credit history in the long run. There are few such financial institutions offering loans to people with bad credit score. The only thing is that you need to pay a high rate of interest as compared to a secured personal loan. If you have a bad credit rating, you need to first consult with a loan officer who can provide you with details and options suiting your financial needs.