There are many ways to borrow money. Now, many of us prefer to pay bigger expenses with the help of loans, as it is easier and more comfortable than paying a lot of money at once. A personal loan is always a great idea when you want to buy a big item or have a heavy expense. There are two ways to get loans – secured and unsecured.
In the case of secured loans, you have to offer something as collateral in exchange for the loan getting approved. As for unsecured loans, there are no collaterals involved in the process. However, just like everything else, there are pros and cons for both. Let us take a deeper look at them.
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What is a secured loan?
Secured loans are backed by collaterals. The most common forms of secured loans are home loans and car loans. As you may have guessed, the collaterals in these forms of loans are the homes or the cars. If you are unable to pay back the loan you owe, the bank will seize the collateral that had been offered initially. And this will negatively affect your credit report as well.
Houses and cars are not the only forms of collateral that can be offered. It can be anything that you own as well. Here are some of the types of collateral that you can offer:
- Real estate possessions
- Your bank accounts
- Any vehicles that you own
- Stocks, bonds, mutual funds, etc.
- Insurance policies
- High-end collectable items (paintings, precious metals like gold, etc.)
What is an unsecured loan?
Unsecured loans do not need any collateral. However, you will still have to pay interest on them. Credit cards, personal loans, student education loans – these are some that are classified under unsecured loans.
Because there are no collaterals involved, personal loans are offered by banks based on the user’s credit score. The bank also checks your history of paying back credit. However, personal loans also have higher interest rates at times (though it might not be always).
Have a plan
Whether you want to apply for a secured or an unsecured loan – all of that is completely up to you. However, it is important that you make a note of your loan repayment plan. Make it a rule that you only borrow in amounts that you can pay back to the bank easily. In addition, make sure that the EMI repayment scheme provides you with enough time to pay back all your loans.
If you are looking for a personal loan solution with flexible EMIs, then you can apply for a personal loan from Airtel Finance. They offer easy and adjustable EMI repayment options. In addition, the personal loan offering from Airtel is also very fast and you can get credit as soon as the amount gets approved.
Or if you are looking for credit cards, the Airtel Axis Bank credit card is also incredible. You can apply for the Airtel Axis Bank credit card today and stand to reap plenty of benefits!