Avoiding loan defaults is the best way to save your credit record. While the financial market today has opened up avenues for all sorts of borrowers, risk options are also running high at the same time. While secured loans such as home loans, may offer the best solution for short – term borrowing at a reasonable interest rate, they require keeping collateral for an unprecedented period of time, until the repayment of the loan amount.
Vehicle loans can also be termed as viable options these days. On the other hand, unsecured loans such as credit cards or personal loans offer a comparatively risk – free borrowing arena as they do not require any collateral. They however make up for it, by way of extracting huge amounts of interest from the borrower.
These loans have managed to capture the pulse of the market as people earning as low as Rs.`3,000 per month can now avail a personal loan. Customers are also tempted on the pros of credit cards, not stopping their spending spree until they are found to be neck – deep in debt.
By getting carried away and defaulting on home or personal loan, borrowers make irreplaceable damage to their credit worthiness, as it forms a black mark on their credit history. It not only damages their credibility but also restricts their ability to borrow loans in the future. It is important not to be serenaded by tempting loan offers, and save your credit worthy reputation for all its worth, before making any damage to it.