What Are the Different Types of Personal Loans That Exist Today?

Do you find yourself asking the question, “What types of personal loans are there?” If so, you’ve come to the right place.

Finding personal loans isn’t as difficult as it used to be. The challenging part is figuring out which lender is the best choice for you. Once you’ve done that, it’s a simple matter of deciding.

Let’s take a look at several of the available loan options available. Read on!

Collateral Loan

A collateral loan is a type of loan that uses the equity in the borrower’s property, such as a house, as security in order to secure the best personal loan.

This type of loan is beneficial for people with bad credit since it reduces the risk associated with lending. Collateral loans typically offer lower interest rates than other types of loans and can be easier to qualify for.

These types of loans may be more difficult to qualify for and usually carry higher interest rates. 

Secured Personal Loans

Secured personal loans are a type of loan in which the applicant must provide an asset, such as a home, vehicle, or item of value, as collateral for the loan. The loan is secured by the asset, and the lender has the right to seize the collateral if the borrower fails to make the loan payments.

Secured personal loans can also be referred to as collateral loans, asset-backed loans, or home equity loans. Secured personal loans generally have lower interest rates than unsecured personal loans since they are less risky for the lender. 

Home Equity Loans and HELOCs

Home equity loans and HELOCs are two of the most common types of personal loans available today. With a Home Equity Loan, the borrower is given a fixed loan amount that is secured by the equity they have in their home.

The loan will be repaid in full when the loan is paid back, making it an ideal option for people who need money upfront. On the other hand, a HELOC is a revolving line of credit secured by the equity in your home.

Payday Loans

Payday loans are a type of personal loan that is usually unsecured and are provided to people in need of short-term cash. With this type of loan, borrowers typically receive a lump sum of money from a lender and then have to repay the money within a short period of time, usually 14-30 days.

The interest rates are often higher than other loan options, and the amount that can be borrowed is typically low, so it is important to consider other loan options before you secure a collateral loan.

Debt Consolidation Loans

Debt consolidation is a type of personal loan that is used specifically to combine multiple debts into one single payment, making it easier and more manageable to pay off the debt.

It also allows for a longer repayment period so that it is easier to make payments.

Explore The Different Types of Personal Loans 

Personal loans come in multiple types to fit your specific needs. Secured and unsecured loans help fund different goals, from home improvements to debt consolidation loans.

Loans such as payday loans and title loans can provide quick access to cash in certain situations. If you need to borrow money, understand the different types of personal loans so you can make an informed decision. 

Did you find this article about the best personal loans helpful? If so, check out the rest of our blog for more related content!