Before you decide where you want to get your personal loan from, you need to decide what type of loan you’re looking for. There are a few different types of loans you can choose from.
Secured vs. Unsecured
First, you have secured versus unsecured loans. Secured means that a loan has collateral attached to it.
For example, if you fail to meet your payments on a loan, the lender can repossess your home or vehicle or any other asset you used as collateral when you agreed to borrow money from the lender.
On the other hand, an unsecured loan does not require any collateral, so borrowers do not need to worry about the lender coming after their belongings.
This is especially helpful if you are already struggling to afford your monthly payments since it means you won’t need to risk the things you already have.
Fixed Rate vs. Variable Rate
Next, we have fixed rate loans versus variable rate loans. These are pretty easy to understand. A “fixed” rate means your interest rate for a loan will never change until the loan ends, while “variable” interest rates may change every month depending on the terms of your loan.
There are a few things you need to keep in mind with these loan types, such as different monthly payments or different loan terms, so be sure to look over your loans carefully before deciding which one is right for you.