Type of Loans

A Loan is where you borrow money from Bank, Credit Unions & Financial Institutions etc.; the borrowed money has to be paid with certain period of time with certain percentage of interest.

Loans are two types

Secured Loans

Unsecured Loans

Secured Loan:

Security loans are paid based on your propriety or valuables are held as security. On secured loans if you’re unable to pay the lender can take your assets and may be going for auction after certain period of time.

Secured Loan Example:

Mortgage - Mortgage is a legal agreement between you and money lender he is agreeing to pay you money by mortgaging your building, house etc.,

Unsecured Loans:

 Unsecured Loans are paid on basis of your credit in other words the lender trusting you that you will can able to pay back the money. In this kind of loans security are not compulsory Other than your credit worthiness.

Unsecured Loan Example:

Bank Over Draft (OD) – Bank OD you can use your bank to pay your needs with certain ceiling. And you have repay it with interest.