The different kinds of loans available are as follows:

Unsecured Loans

An unsecured loan refers to any kind of loan that is not related to the legal rights of your assets. In case you default on the loan due to bankruptcy or any other reason, the unsecured debt lender does not have the right to claim any specific asset. Credit card debt or perhaps a personal loan from a friend or relative is unsecured loan.

Secured Loans

This is when you take a loan against your property or asset, which means when you fail to pay the loan back, the lender will have legal rights to take possession of your asset which is also knows as repossession and sell it to recover some of his loss.

You may find many lenders around you, like banks, financial institutions, even your relatives, but in both the cases; you should remember that you should not over borrow which will ultimately strain your finances.

Types of Loners

There is first class of people who are the emotional extremes – who either dislike loans so much that they will not borrow even a rupee, or those who like loans so much that they have over burdened themselves with EMIs and struggling under it.

Another class is those who says, “I’ll take it, but I won’t like it’. They take a middle approach when dealing with their liability. Once they have taken the loan because they need it, they do their best to repay or prepay it as quickly as possible because of the emotional discomfort caused by the debt. Most of us fall in this second category.