15:36 26 August 2013
Earning money to support one’s needs is not an easy task and neither is providing for a family. One must work hard day in and day out to earn a good sum of money to buy the necessities needed by the family. However, there are times when financial problems occur and bills that are needed to be paid just start to pile up. During such times, people get worried over how they will pay the bills and where they will get the money. Nowadays through loans one can gain the money needed to pay for the bills without worrying of repaying the debt immediately.
Generally speaking, a loan is a debt. A person who avails a loan borrows a certain amount of money which is called the principal. The borrower will repay the exact amount of the principal with an additional interest. The rate of interest depends on the agreement of the borrower and credit provider. Commonly, the repayment of the debt is done through instalment or partial repayment. Currently there are several types of loans that people can avail. First is the secured loan.
Secured loan is a common type of loan wherein borrowers are asked to pledge some of their assets or properties such as land title, car, or house as collateral. Thus, if one fails to repay the credit provider will be entitled to repossess the property and sell it. One example of a secured loan is the mortgage loan.
Second is the unsecured loan. Unlike the secured loan, unsecured loans do not require borrowers for collateral. Thus, these monetary loans are not secured with borrower’s assets. Some of the common unsecured loans offered by credit providers include credit card debt, corporate bonds, as well as personal loans.
Other types of loan include concessional or “soft loan”, demand loans, and subsidized loans.