Types of personal loans and their use

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By : Raam Dhakad

KYD - Personal Finance

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We often consider personal loans to cover our personal expenses or for various purposes. A personal loan is an amount that you can use for your own expenses.

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A personal loan is a loan product, which can be secured or unsecured. It is available through a bank, credit union or online lender.

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You are not the only one who is considering a personal loan to get out of a financial hump or to consolidate debt.

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Whenever you need money for any of your needs and you go for a loan, you must first compare the types of loans available.

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We often consider personal loans to cover our personal expenses or for various purposes. A personal loan is an amount that you can use for your own expenses.

Secured Personal Loan

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An unsecured personal loan does not require collateral to be approved. Plus, you will be able to access funds faster without putting your assets at risk.

Unsecured Personal Loan

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This loan is usually used to pay off the outstanding loan balance by saving on interest.

Debt Consolidation Loan

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These loans come with an interest rate that does not change over the repayment period. Most personal loans fall into this category.

Fixed Rate Loan

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These types of loans come with a fluctuating interest rate. This loan should be considered only if you need to borrow money only for a short period of time.

Variable Rate Loan

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Buy Now, Pay Later Loans are usually given to consumers through mobile apps, such as Afterpay, Klarna and Affirm.

Buy now, pay off debt later

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