A personal loan is considered the most useful and effective loan for borrowers. First, like other loans, you are not obligated to use them for some specific purpose. On the other hand, getting a personal loan is an easier and faster process.
So you do not need to take many headaches for this. Whether you wish to get a HDFC bank personal loan or other loans, it is better to use different types and uses of personal loans. This is how you would be able to make the most of it.
Different Types of Personal Loans
There are different types of personal loans that you are required to know about. But do not worry, as most of these types work similarly. A few of the personal loan types are described below for your convenience.
Most personal loans are of this type. In this loan arrangement, you are not required to put in any collateral to get your loan request approved. Upon your loan request getting approved, you get a lump sum of cash (either the requested amount or lesser than it). You are given a fixed period, aka loan repayment period, within which you have to repay the loan.
In secured personal loans, you are supposed to put collateral against your loan. In most cases, you can put some assets as collateral, such as a home, boat, car, etc. Upon paying off the personal loan within the specified loan repayment period, you get your asset or collateral back from the bank. The loan interest rates are known to be typically lower in the case of secured personal loans.
Credit Builder Loans
These loans do not generally extend you any line of credit. Such loans are deposited into a savings account controlled by the lender. You are supposed to make the payments on balance for the loan duration. As you make regular payments, your credit score and history improve for obvious reasons. At the end of the loan period, you get the amount in full minus the loan charges.
Specialized Lenders Loans
Service-oriented companies provide these kinds of loans to consumers to help them afford their services or products. For example, if you want to buy a branded product from a shop or company but cannot afford the full amount.
So in this circumstance, the company or the product brand will finance or give you a loan to buy the product. Then you will have to pay off the loan within a specific period. There will be interest levied. The interest is to vary depending on various aspects and factors.
What Are the Uses of Personal Loans?
There are different uses and applications of personal loans that you should know before applying for one. A personal loan has no fixed use or application compared to other loans. Different individuals use them for different purposes.
Debt consolidation is the first and foremost use of personal loans that most borrowers consider. If you have some high-interest debt or loan, you can take a personal loan to pay off that high-interest loan.
Buying Things and Objects
You can take a personal loan if you wish to buy expensive things or objects. In such cases, personal loans are very useful if you cannot afford an expensive item. For example, if you wish to buy a car, you can opt for a personal loan and use the loan amount to buy the car.
Medical emergencies are one of the most common instances when people prefer to opt for a personal loan. You can also seek a personal loan during your medical loan. It is ideal as getting a personal loan is easy and fast.
So you can use a personal loan in any of the above-described situations or purposes. Not to mention, you can use it in any other way possible.