Sometimes an individual want access to funds but they cannot disclose the purpose of the loan. Or they do not want to disclose the purpose of such loans. Thus what they do is go for a loan where they are not asked such questions. It could be business investment or an investment in the market. The person might want to make a purchase in the market which they do not want to make public or expose the decision to the bank.
There are also times when the user does not have a very valid reason so as to convince the bank to grant them the loan. The person could be paying back there gambling losses. Maybe getting the loan to pay of other more expensive loans they might have incurred over the years. Thus the role of personal loans comes into existence. These loans are easy to get and a easy form of medium term credit. The person who applies for such loans can get loans for more then a year. The interest rates are a bit high and also the penalties and other charges are also a bit high when it comes to personal loans.
There are two types of personal loans in the market. There are secured personal loans where the applicant will have to provide an expensive asset which has a value more then the loan amount as collateral. Then there are unsecured loans where there is no need for such assets or any form of collateral. Also the applicant can aks the bank to reduce there interest rates as it can be negotiated in certain cases. These loans are given out to most individuals in the market who have a decent credit rating and have a decent and steady job or business. This is a medium risk financial instrument for the bank and thus the banks tend to be a little cautious when it comes to giving out such kinds of loans to individuals in the market.
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