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You should know about the different types of loans available on the lending market as well as the credit underwriting process of each before applying. Visit Us: www.algo360.com/
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Learn about the different types of loans www.algo360.com
When should you apply for a loan A loan is an amount of money that an individual borrows from the digital lending platforms of banksor other lending institutions. To pay back the loan, the individual has to return the borrowed amount along with a predetermined interest on it within a given time limit. While traditional loans take a longer time to be approved, the digital lending in Indiahas a quicker credit underwriting process. Let us talk about the most common types of loans available on the lending market, secured and unsecured loans.
What are unsecured loans? In an unsecured loan, the borrower does not submit any mortgage to take out the loan amount. The banks and digital lending platforms provide them with a loan according to their credit score, credit history, income details, etc. Examples: • Personal loan: This type of loan is taken out when the borrower needs money for personal reasons. Digital lending in India operated by fin tech companies fall in this category. • Small business loan: This type of loan is given out to start-up entrepreneurs or people who wish to open small-sized businesses.
What are secured loans? To avail a secured loan, the borrower submits an asset as a mortgage. Its evaluation during the credit underwriting aishould be similar to the loan amount being taken out. Examples: • Home loans: A home loan is taken out when you buy or build a new residential property. • Loans against securities: In this type of loan, the borrower submits their investments or savings like shares, mutual funds, fixed deposits, bonds, or other things of monetary value to the bank to avail a loan.
Things to keep in mind while taking out loans When you take out a loan, remember to apply for that much amount which you can handle without disturbing your finances. Read about the terms, conditions, credit underwriting ai process, and other details of the different types of loans available. This will help you to select the best one for your needs.
