Two different perspectives exist when it comes to deciding the best loans available in the market – one is from the lender’s perspective and the other is from the borrower’s. From the lender’s perspective, the loans that are secured and carry high interest rates are the best loans. Borrowers would find those loans to be the best which are unsecured and come with the least interest rates. The toughest challenge is to find out the median and mark a loan to be the best from both the lender’s and borrower’s perspective. Now, the answer lies in the loan details and its affordability to the borrowers.
Secured loans are preferred by the lenders as they know that the loan can be recovered in case the borrower fails to repay the loan on time. In case of a secured loan, the borrower needs to place collateral and this can be seized in case of a default in loan payment. The loan amount too can be recovered by selling the assets that were seized from the borrowers. So secured loans acts as a guarantee for the loans and borrowers too seldom default on payments when they have placed collateral. Lenders also want to put high rate of interest on the loans as that would imply higher profits for the banks. For banks and lenders, the best loans are the ones that carry high interest rates, which would ultimately turn out to be profits for them.
On the other hand, borrowers prefer the unsecured loans as they do not need to pledge anything to the banks in the form of collaterals. They also consider those loans to be best which have low interest rates. The lower rate of interest would make life much easier for the borrowers who would eventually have to pay low monthly installments while repaying the loan. Thus borrowers always prefer the unsecured loans with low interest rates.
The interest rates have been recently increased, so opting for a secured loan won’t be too wise a decision. With the rise in interest rates, borrowers would be compelled to opt for the unsecured rates where they will not be required to place collateral. Now, secured loans do have a sunny side – they are highly flexible and borrowers can make repayments over a long time period. So the choice of best loans rests on financial requirements of the borrowers as well as their future financial goals.
Now, borrowers need to consider whether they are ready to place collaterals or not – this again depends on their current financial status. This decision would itself make a huge difference to the marking of a loan as best or good for the borrower. If a loan is affordable to the borrower and he/she is comfortable with the repayment scheme then that loan itself falls in the
category of best loans.
Thus, we get to see that it is not very easy to define the best loans and everything is too circumstantial. There are pros and cons associated with every type of loan and the decision on the best loan at the end of the day rests with the borrowers. Borrowers need to be extremely comfortable with the loan and repayment. They should never be anxious about the repayment and should never feel that they have risked just a bit too much.