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Personal Loans-The Different T
Tough financial conditions have rendered a common man incapable of having any savings while running his day-to-day affairs in a healthy manner. Personal loans can really help in this regard if a person finds himself in need of immediate cash. People who have a bad credit history find these loans the most viable option in financial difficulties.
It must be understood that personal loans are different from banks loans. Banks loans are provided after a lot of screening of the loan applicant. A bad credit score holder is mostly rejected for bank loans or is provided with ridiculously tough terms and conditions if provided with a loan deal.
Personal loans are however, provided by private and personal lending companies. These lending companies target people who are rejected by banks for loans. For this reason, they don’t check credit ratings and don’t make it a yardstick to decide on loan applications.
There are two types of personal loans. One of the two types is payday loans. These loans are designed for emergency uses only and must be returned on your next payday. Most of the lenders would ask for a post dated check containing the loan amount dating the day on which you will receive your monthly salary.
The other type of personal loans is the bad credit loans. These loans are long term loans as considered to payday loans but private lenders ask for either a cosigner or collateral. A cosigner is mostly a living human being who can take the responsibility for you.
It basically means that if you fail to pay the loan amount within the allotted time then the cosigner would be accounted for it. A cosigner can be anyone from your spouse, your father to your friend. You must take your cosigner into confidence. The more financial strong your cosigner, the more the chances would be that your loan application is going to be accepted.
Collateral in business terms is basically any valuable item which you must put up as a security deposit to the private lender. It may be your car, your motorbike or any real estate item. You will own it even after putting it as a security deposit but if you fail to return the loan amount in time then the lender can lay claim to the collateral.
It is important that you consider and evaluate your financial conditions before applying for personal loans. If you are in need of immediate cash and believe that you can repay it on your next payday then opting for payday personal loans is an excellent option.
However, if you need cash for long term, have a bad credit history and can only pay loans in installments then choosing the long term personal loans for bad credit are a viable option. It is important that you have a cosigner or collateral in such loans and if you can’t come up with any of these then you must pay compensation by repaying the loan at a higher interest rate.