Information on Personal Loans, Secured Loans and Unsecured Loans
Information on Personal Loans, Secured Loans and Unsecured Loans
Personal loans can be a great way to relieve debt when used appropriately. There are two main types of unsecured personal loans. There are secured personal loans and unsecured personal loans.
Secured personal loans ave a longer repayment term with lower monthly payments than an unsecured personal loan. They also may have a lower interest rate which makes them more cost-effective. You can apply for these loans by pledging assets like your home, your car, or other assets to back the loan. Because there is less risk for the lender with a secured loan, secured loans are easier to get then unsecured loans.
An unsecured personal loan is the opposite of a secured loan. There is no collateral to back the money borrowed. Unsecured loans have a higher interest rate. Unsecured loans require a more thorough credit check because they are riskier for the lender. These loans are ideal for people who do not own property or cannot put their property up as collateral.
Personal loans range from $500 to $25,000 but lenders are typically wary of approving large sums of money because if the borrower defaults they will have to seek legal means to recover their investment.
There are benefits to unsecured loans. If the loan goes into default, there is no property to be taken as repayment for the loan and the shorter loan term promises a quicker payoff. But these loans do carry a higher interest rate. Secured loans are easier to apply for because they do not require all the financial background to prove your credit worthiness that unsecured loans require.
Many people with bad credit are opting for unsecured loans because they have a quicker process than a bad credit personal loan. Some also use secured loans because they offer lower interest rates and are easier to qualify for. Learn more about finance and loans.