Traditionally loans are of two types – secured and unsecured. A secured loan is granted against collateral, whereas an unsecured loan is granted based on an individuals credit history. It is more difficult to get, but is considerably cheaper than a secured loan. What is at stake is no material loss, as there is no collateral involved anyways, but rather, the borrower’s name and reputation. In the event of him defaulting on repayments, he could lose face in the community he lives (wonder which is worse, losing the collateral or losing face?). Nevertheless, with the economy being in the state it is, funds are tight and Unsecured Loans are popular.
Two types of such loans deserve special mention. Like the name suggests, personal loan is a loan is taken to meet a personal requirement. Absolutely no collateral is asked for. The transaction is done based on good faith and the borrower’s ability to repay. A personal loan could vary from $100 to $250,000. Quite a range huh! Similar to Personal Loans in the sense, that they too meet a personal need. A rather urgent personal need, one might dare add. This Small Business Loans is granted up to payday. An unexpected expense comes, a child is sick or the car battery runs down. It’s a trifle difficult to meet these unforeseen expenditures. That’s when a payday loan could be sourced. It would be of great help if the borrower had a steady job and a bank account. The lender could then wire the money to the borrowers account within 24 hours, and then withdraw it after payday. Challenging times require tricky solutions. Both these forms of loans are fast gaining acceptance, and as long as there is sufficient understanding between borrower and lender, these measures should work.