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My Loans
By peace | May 9, 2007
Taking up loans is like carrying a child in your arms. It is tiring and a heavy load to bear. I do not like to take loans! However, they are necessities at some part of our life.
There are many types of loans. I have managed to learn some of them when I was studying for my life insurance course.
1. Variable Rate
A variable-rate loan has an interest rate that is variable in accordance with changes in market interests rates, usually in response to minimum lending rates announced by the government. When the rate changes, the monthly payment sum will also change.
2. Fixed Rate
Many instalment-based loans have a fixed rate of interest. This means that the interest rate and, therefore the monthly payments, stay the same for the term of the loan.
3. Secured Loans
Secured loan happens when a borrower puts up security or collateral to guarantee it. The lender can sell the collateral if the borrower fails to repay. Car loans and mortgage loans are the most common types of secured loans.
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4. Unsecured Loans
An unsecured loan is made solely on the borrower’s promise to repay. If the lender thinks the borrower is a good risk, nothing but his signature is required. However, the lender may require a co-signer, who promises to repay if the borrower does not. Since unsecured loans pose a bigger risk for lenders, they may have higher interest rates and stricter conditions.
I do not have the habit of taking up loans. I do not have any fixed rate loans at the moment. However, I have some variable rate loans to pay, which is my loans from my life insurance. The next and the last loan that I have is secured loan, my home loans. I hope I can clear my loans as soon as possible.
