For personal needs, personal loans are most suitable. Available inboth secured and unsecured form, this loan category provides suitablecredit solutions for both short-term and long-term needs. Besides,its flexible nature, adds-up to its popularity.

The secured type of personal loans can only be availed byhomeowners and property owners. Availed by pledging collateral, theadvantages of this sub-type are quick attention, high credit range(as high as ?250,000), low interest rates (as low as 6.7%),diverse payback rates and methods, and negotiable loan terms andconditions.

Presence of collateral ensures that the borrower pays back asagreed ? an assurance for the lender. However, if the borrowerdefaults to payback as decided then the lender can seize the pledgedcollateral ? a risk for the borrower. Another inseparablelimitation of secured credit is that the time-consuming propertyevaluation process slows down the overall loan approval procedure.

The unsecured type of can be availed by all ? tenants, homeowners, property owners andstudents as well. Availed without pledging collateral, the advantagesof this sub-type are no time-consuming property evaluation procedureleading to less paperwork and quick loan approval.

Absence of collateral not only speeds-up the entire procedure, butmakes it a safe contract too. That is, if the borrower defaults topayback as decided then there is no immediate risk to hisproperty or valued item. Legal action is the only thing a lender cando against a defaulter.

The drawbacks of availing unsecuredcredit are limited credit range (as restricted as ?25,000),comparatively high APR (as high as 41%), fixed rate plan and paybackmethod and non-negotiable loan terms and conditions.

Based on the above-stated comparativestudy, it is clear that secured type of personal loans is mostsuitable for ?big and long-term? monetary requirements, whereas,unsecured type is most suitable for ?small and short-term?monetary requirements.