Loan is the most useful help one can take when in financial trouble. Many financial institutions offer various types of loans. These differ in the type of repayment. Loans are offered for various purposes like education, wedding, car, house and so on. Based on these parameters, there are two major categories of loans: secured loans and unsecured loans. In a secured loan, the borrower has some asset that can be taken by the body, giving the loan in case the person fails to repay the loan. In case of unsecured loan, there is no such asset which is pledged. Further, there are many types of unsecured loans as well. Following are some well known types of unsecured loans:
Credit Card Loan
As the name suggests, this loan is offered to people who have the credit card facility. In this type of loan, the person does not get a big amount as the loan like in other types. Instead, one gets a small amount whenever required. Thus, one can get small amounts multiple times. This is better if you have to make small payments. One other important thing that makes this loan type convenient is that you can get instant loan once your proposal is approved. This makes getting money easily when required.
The payday loan is also a very popular type of unsecured loan. It is offered by many small and big financial institutions. This type of loan is preferred by people as it is very convenient and does not burden the borrower. This loan type relies on the previous financial history of the person seeking a loan. The loan is given on the basis of the employment and earlier records of the person. This is a short term loan. The amount given as loan is not much and is expected to be paid back soon. There are diverse rules regarding payday loans in various countries. Some people also consider this loan to be risky from the giver’s point of view. In today’s situation of financial crisis and instability, payday loans are considered very crucial in improving the condition of the people.
The interest rate and payment details of this loan may vary between institutions offering the loan. This loan is mostly tied to the payday of the person seeking loan, although such criteria is not totally essential. The payment can also be made on the specified date and may not be connected to the payday. Besides these, there are many other types of unsecured loans like signature loan, student loan and so on.