Personal Loan Essay

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Not having enough money to spend is a feeling most of us are familiar with and many are probably quite used to this reality. But what happens when emergencies arise and you truly are strapped? Personal loans offer fast cash solutions to help you fund your plans in the short term.

They do however come in an assortment of versions which can be perplexing if you haven’t applied for one before, so here’s an introduction to help you understand what personal loans are and the different types available in Malaysia.

What is a Personal Loan?
You can think of a personal loan as a method of financing that has the following features:
1) Shorter repayment tenure than other loans, typically 1 to 10 years;
2) on average loans out lesser money than a mortgage
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Do you really need it? If you can wait it out and save up, it probably isn’t the best idea to get a personal loan this time, but in case of emergencies, it may be a practical avenue for financial assistance. Personal loans are useful for bills and emergencies where a credit card just won 't cut it but be serious about repayment to avoid any untoward credit black mark.

Types of Personal Loans

As technical classifications for personal loans go, there are conventional secured loans, quick unsecured loans and consolidation loans. Here’s the low-down on each:

Secured personal loans
Secured personal loans are given out with collateral support, such as a fixed deposit or unit trust account in the same bank. It may also require a guarantor to be liable for your loan. These loans are less risky from the financier’s perspective and if you qualify will usually carry a lower interest rate than that of unsecured loans. It may also facilitate more substantial loan amounts.

It’s important to note that with secured loans, you do run the risk of losing the asset you’ve placed on collateral if unable to make repayments due to death or disability. A great add-on to your personal loan is an insurance scheme to protect the loan and the assets in question with the majority of lenders already making this a compulsory

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