There are times in life when you go through unexpected and unforeseen financial crises and you need immediate cash. Or there might be some personal needs of yours for which you require money, such as educational expenses, a dream holiday, your wedding, home renovation or anything under the sun.

You can go for personal loans in such situations. Personal loans are multipurpose interest-based debenture loans that are basically used for family and domestic purposes. You can use personal loans for paying your tuition fees, buying furniture, television sets, cars, washing machines, etc. The greatest advantage you get by going for personal loans is that you need not disclose the reason for taking the loan. You can meet a variety of expenses through personal loans, such as travel, medical, marriage, honeymoon and so on.

You should not take the decision of going for personal loans in haste, just to fulfil any wish that comes to your mind. Personal loans should preferably be taken to purchase things that have a substantial life, such as meeting educational expenses, home renovation, etc.

On the basis of the repayment terms and conditions, personal loans are categorized into the following three categories:

* Instalment loans
* Balloon loans
* Single payment loans

Instalment loans are the most popular one out of the above three types of personal loans. In case of instalment loans, you are required to return the loan amount along with the interest in monthly instalments over a time-period pre-assigned by the lender. Car loans come under the category of instalment loans.

In case of balloon loans, you need to pay the instalments over a particular period of time and at the end of the loan term; you are required to repay a comparatively greater amount of money. That’s why the name ‘balloon’ loan. One thing which is very crucial to be considered by a borrower opting for balloon loans is that your income should not decrease during the loan term so that you can repay the 'balloon' amount at the end of the loan term.

If you go for single payment loans, you are required to repay the entire loan amount along with the interest rates at one go at a particular date as decided by the lender.