It is often said that personal loans are the most 'generic or basic' form of all loan categories - other major categories being mortgage and commercial loans.
As mortgage and commercial loans are exclusive categories with specific scope, the market share of these two is not as big as that of the personal loan category.
So, what are personal loans?
Today, lending is a full-fledged competitive industry, as most lenders are offering personalized loan deals to target maximum number of loan seekers. The growing competition and the aforementioned flexible range of products have made the personal loan category even more affordable. As a result, more and more people are conveniently availing them even for lifestyle purposes.
Some of the most saleable personal loan products are:
bad credit loans, business loans, car loans, career development loans, cosmetic surgery loans, debt consolidation loans, education loans, holiday loans, homeowner loans, home improvement loans and wedding loans.
The above-mentioned range of products proves that personal loans - segregated under secured (credit against collateral) and unsecured (credit without collateral) sub-categories - offer diverse financial solutions.
1. Secured type of personal loans ensures maximum loan benefits. Designed only for homeowners and property owners, this sub-category is most suitable for loan seekers who have a big monetary requirement, and are capable and willing to offer something valuable as collateral
2. Unsecured type of personal loans ensures fast loan approval. Designed only for tenants, homeowners, property owners and students as well, this sub-category is most suitable for loan seekers who have a small and temporary monetary requirement, and are incapable or unwilling to offer something valuable as collateral.
Please note: Decision of choosing between the two sub-types should be based on credit requirement and overall feasibility. And, for that a clear understanding of the advantages and disadvantages of both sub-types is essential.
Also, to avoid unpleasant surprises in the future, loan seekers should avoid hasty decisions and gather as much information as possible from as many lenders as are available in the loan market - both online and offline. Basically, they must get a fair idea of the market trends.
The approval of a personal loan application and finalization of the terms and conditions is subject to the lender's credit policy and the borrower's residency status, age (18 years and above), credit history (good, average or bad) employment status (future payback ability), debt to income ratio (current financial standing) and the value of the pledged collateral (in case of secured credit only).