April 24, 2007Researchshows that more and more people are opting for personalloans over the Internet. Its growing popularity can beattributed to factors like:
Convenient presence ofnumerous lenders, which makes loans more accessible and the entireloaning process very expedient
Better transparency inlending rates across the country
Cheap loan deals ascompared to conventional lending institutions, as the overheads ofonline lenders are comparatively less
The category is like a one-stop credit shop, asthere are a variety of products to choose from ?bad credit loans, business loans, car loans, career developmentloans, cosmetic surgery loans, debt consolidation loans, educationloans, holiday loans, homeowner loans, home improvement loans andwedding loans.
Mostof the above mentioned personalloan products can be availed in both secured (by pledgingcollateral) and unsecured (without pledging collateral) form. The keydifference between the two sub-types is presence or absence ofcollateral, which has both advantages and disadvantages.
Presenceof collateral in a secured deal leads to:
Advantages like quickattention, high credit range, low APR, multiple rate plans andpayback methods and negotiable loan terms and conditions
Disadvantageslike clientele limitation (credit forhomeowners and property owners only), slow approval procedure (due toproperty evaluation procedure) and repossession threat (in case theborrower fails to payback)
Absenceof collateral in an unsecured deal leads to:
Advantages like notime-consuming property evaluation procedure leading to lesspaperwork and quick loan approval. It also guarantees that repeateddefaults ? accidental, incidental or intentional ? or non-paymentwill not lead to repossession of a precious asset
Disadvantageslike limited credit range, comparativelyhigh APR, fixed rate plan and payback method and non-negotiable loanterms and conditions
Basedon the above-stated advantages and disadvantages, it is clear thatsecured type of personal loansis most suitable for ?small and short-term? monetaryrequirements, whereas, unsecured type is most suitable for ?big andlong-term? monetary requirements.
Onlinepersonal loans come wellequipped with attractive offers. However,a thorough evaluation of the market trends is recommended, as loanterms and conditions vary from lender to lender.
