Personal loan means the barrower does not raise any security as guarantee to repayment of the loan. That’s why it is called as unsecured loan. Personal loan tend to carry high interest rates. Personal loan is the only option for those who have little credit. Personal loans are usually made for general expenses. The following are different types of personal loans.
1. Secured loan: Secured loan is a loan that offers some guarantee, that is may be home, property, car, and building. Since security is offered, the lenders need not to worry about the repayment of the loan. The advantage of secured loan is lower interest rates. And the disadvantage is that you may loose your property.
2. Unsecured loan: Unsecured loan does not require the guarantee or security. You need not be a property holder. It will be processed easily than secured loan. Unsecured loan requires lender’s application and good credit report. The disadvantage of this loan is you have to pay more amount of interest rate.
3. Line credit: Line credit may or may not be secured. This type of personal loan which is issued is based on credit card history.