Several factors have induced the public into having difficulties when purchasing homes and many other assets. • Taking up loans allow us to finance our home and to getting loan for education funding. • Different types of loans are available, be it the home loans, personal loans and the like.
Offers made by different local commercial banks have allowed us to be able to buy almost any luxurious items. • Loans can generally be divided into:-(1) Secured Loans (2) Unsecured Loans • The ideal type of loans will be the secured loans.
Secured Loans • Secured Loans are more commonly known to be ‘gadai janji’. • Here, the borrowers are obliged to pledge any of their assets (depending on the value) to the banks. • Valuation will be done by the bankers to see if the value of the asset falls within the category for the proportion of the amount.
One of the advantages of taking up secured loans is the lower interest rates imposed on their borrowers. • In addition, it will be less risky for the lenders when loaning to the borrowers. • If the borrowers fails to pay back the loan debts, the property which is the collateral item will be sold off to recover the money.
Unsecured Loans • These type of loans are typically the opposite of the secured loans. • It does not require the borrowers to pledge any assets, and is more of a personal loan. • Usually the unsecured loans take up a longer time to be approved and the banks will check if the borrowers are capable and credible to repay the mortgage loan.
The benefit is that there is no fixed repayment period, and is a shorter term, from 1 year up to 5 years. • However, the drawback is that there will be a higher interest rate being imposed on the borrowers.
To me, it is advisable for the borrowers to take up the unsecured loans, in situations where they are in urgent need of money due to the high interest rate imposed. • Still, it is best to understand your financial capability before buying, because for secured loans, failing to repay will cause you to lose your home.
To read up more on what secured loans is and the different types of home loan products, check this link out: http://www.quora.com/Elly-Chen-4/Posts/The-Distinct-Line-between-Secured-and-Unsecured-Loans