If you are in need of financial help and have come to the decision to borrow money for the first time then read on, as it will help you gain information on the subject to make the process much easier.
Secure and Unsecure loan
This differs depending on the reason you are taking the loan for, as each option benefits different types of loans. A secure loan is having to put one of your assets as collateral in case you do not pay your debts on time. An unsecure loan depends on your creditworthiness and is usually for individuals who want to borrow a small amount of money.
Secured loans usually include mortgages, car loan and construction loan whereas, unsecured loans consists of personal loan, education loan and renovation loans.
The percentage due within a period of time as a proportion of the amount borrowed is called the interest rate; the interest rates per month pay defer depending on the amount you are borrowing. If you are borrowing a large sum of the money, this will extend the amount of time for you to pay back the loan but it will also increase your interest rates, which will be very expensive.
As mentioned above unsecured loans are based on your credit scores, if you have good credit scores then it is likely for you to get good rates. Banks such as 221 in Hong Kong provide excellent low interest rates depending on your credit score and provide a repayment period from 2 months to a maximum of 72 months.
Credit cards are a good option especially if you plan on borrowing a small amount of money, credit cards can be used to make payments on a regular basis, and as long as you make sure to pay your balance on time, it should be quite an easy process. But if you neglect to pay on time, it can be messy, as the interest charges will accumulate over time leading to the consumer having to pay off a large sum of money.
However, credit cards can fall under unsecure loans as well as secure loans, if you get a secured credit card, this means that you will have to put a cash deposit to be considered as collateral for the financial institution to secure your line of credit, whereas an unsecure credit card has no collateral to be considered, though this can be an advantage, if you do not pay your balance on time this may lead to you being in debt.
After reading the above you will have knowledge on the advantages and the drawbacks of getting a loan, I hope this information helps you in the process of getting a loan.