Different Type Of Loans & Its Features We might not always have the cash we require to try and do certain things or to buy or shop for certain things. In this condition, individuals and businesses/firms/institutions opt for the choice of borrowing money from lenders. When a lender gives money to a private or entity with a particular guarantee or supported trust that the recipient will repay the borrowed money with certain added benefits, like an charge per unit, the method is termed lending or taking a loan. A loan has three components – principal amount, rate of interest and duration that the loan is availed. Most people prefer borrowing money from a bank or a trusted non-banking financing company (NBFC) as they're guaranteed to the govt policies and are trustworthy. Lending is one amongst the first financial products of any bank or NBFC (Non-Banking Financial Company) offers.
-------------------------------Type of Loan----------------------------On the basis of Security Provided Unsecured Loan An Unsecured Loan is a loan provided solely based on the creditworthiness of the borrower without pledging any collateral as security in the event of default or non-payment of dues. Unsecured loans are also referred to as personal loans and generally provided to borrowers with high credit ratings. For example – Personal Loan, Student Loan, Credit Card Secured Loan A secured loan is a loan in which the borrower pledges some asset as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. For example - Vehicle loans, Mortgage loans, Home Loan