To set up a financial plan means we should think about the needs and goals that should be attained. Recognising and planning about the short and long term goals gives a promise towards a wonderful financial future. First thing that we can do is to identify the financial goals that should be achieved. Without having proper goals in our life money can be spent in any other ways. So planning is very necessary in all these cases. In order to meet the short term monetary needs short term money lender are designed for this purpose. They are considered as the adaptable financial tool which helps to meet the unexpected need of money.
As already mentioned secured loans are those which are received on security of any asset or property. By getting the security or guarantee of the assets the lender can give more amount of money to the borrower. The borrower can get low interest rates for the secured loans. Also there are options of large sum of money and the time for repayment can also be extended. But the main default that this kind of loans are having is that when the property is pledged to the lender they have the right to sell the security placed to him when the borrower fails to repay the amount. There are many examples of secured loans such as mortgage, vehicle loans etc. The interest rate for the unsecured loans is comparatively high than the secured loans. This is because money is given on the belief of the person’s income. There are some factors that need to be taken care for secured loans. Lenders look at some important points to borrow the required amount. Overall credit history, capacity for repayment, and the personal assets need to be checked. Overall credit history of the person i.e., payment history of all the credit accounts are checked which was opened for past 10 years. By checking the credit history of the person they can know whether the person repays his debts at correct time. Capacity to repay indicates whether the person had the financial ability to repay the payment. They check the annual salary of the person and all the financial obligations which he owes every month and annually. They check on the personal assets that are kept as the security for the loan. This happens because it is the main risk factor for them, on the basis of which they lend money. In all the cases of secured loans risk is very low for the lender because money is given on security. If they lose money they can use the security in any way. There are also options of monthly payment in case of secured loans. Mortgage loans are another part of secured loan in which a person gets loan for buying a property or a house. While taking loans with assets or unsecured loans we need to take care of the interest rates because sometimes the fixed rates changes as per the RBI base rates which result in the increase in EMI.