When it comes to getting the right loan for you, the first thing that you should know are the different types of term loans. These are actually short term loans that are meant to be repaid within a limited period of time such as a few months to a few years. This means that you will have to make sure that you are able to pay them back on time because if you don't then you will end up having to apply for another short term loan to get yourself out of a bind. The only advantage of these loans is that you can access cash immediately and you will not have to worry about the consequences of making the payments. Here are the 3 types of term loan.
First there are the unsecured short term loans. These are the most common of the three types of term loans and are available in both secured and unsecured varieties. If you go for the secured variety you will be able to borrow bigger sums of money and you will be able to get longer terms than with an unsecured loan. To apply for a secured loan, you will need to put up your home as collateral against the amount you wish to borrow. This means that your home will remain safe even if you do not pay off the loan in full.
Second, there are the secured short term loans. On the other hand, if you go for unsecured varieties, you will be able to borrow smaller amounts of money with lower interest rates than you would with the secured loans. However, there will be higher interest rates applied to the unsecured loans. And since you won't be putting up your home as a security against the amount borrowed, the interest rate will be quite a bit higher than what you would get with the secured loans.
Third, there are the payday loans. This type of loan is one of the simplest types of loans to apply for. You will just have to show proof of employment with a certain company or with the bank. You will not be asked for any collateral and the interest rate will be very low as compared to all the other types of loans. When it comes to the advantages, this type of loan is probably the easiest to understand and the least difficult to deal with.
Although the above two basic types of loans are very common, there exist some other loans also. These are the unsecured loans, also known as the signature loans. The interest rate for the unsecured loans is a little bit higher than the secured loans; however, it does not carry any kind of risk for the lender like the secured loans do.
Next type of loan is the personal loan. This type of loan can only be done if you have some form of collateral. The collateral can either be your house or car if you want it to be. You can use this type of loan for any reason and as long as you pay back the loan on time. However, you should be aware that there is a higher interest rate for this one than for any other.
The last type of loan is the secured loan. Although unsecured loans tend to have a lower interest rate, the benefits do not stop here. For example, if you default on the loan, the lender has nothing to take from your house or car to pay for the loan. As a result, the interest rate of this type of loan is a little bit higher than all the others.
Knowing what are the 3 types of term loans? With this little information, you will know exactly what you are getting into and whether or not it is something that is right for you. These types of loans are great ways to borrow money in order to make repairs to your car, buy new appliances or even pay for unexpected expenses. Just make sure that you can pay it back before your next paycheck.
