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| What is the Difference between an Unsecured Personal Loan and a Secured Personal Loan? By Beth Pardue |
This is a common question that many consumers have. Many people do not realize that there are even different
types of personal loans. Each type of personal loan, secured and unsecured, have different requirements.
We will look at the requirements for a secured personal loan first. The name “secured loan” pretty much sums it
up, to obtain a secured loan the borrower is required to provide some kind of collateral to secure the loan.
types of personal loans. Each type of personal loan, secured and unsecured, have different requirements.
We will look at the requirements for a secured personal loan first. The name “secured loan” pretty much sums it
up, to obtain a secured loan the borrower is required to provide some kind of collateral to secure the loan.
Secured/Unsecured
Loan article continues...
The most common forms of
collateral used to secure
loans are personal
property such as your
home, land or automobile.
When your home is used
as collateral, you will often
hear the loan referred to as
a home equity loan or a
second mortgage loan.
Personal loans can also be
secured with stocks, bonds,
certificates of deposit, a
savings account, etc.
Loan article continues...
The most common forms of
collateral used to secure
loans are personal
property such as your
home, land or automobile.
When your home is used
as collateral, you will often
hear the loan referred to as
a home equity loan or a
second mortgage loan.
Personal loans can also be
secured with stocks, bonds,
certificates of deposit, a
savings account, etc.
Lenders tend to be more flexible when granting secured loans. Usually the borrower is given a lower interest rate
and longer terms to repay the loan compared to an unsecured loan. The downside to a secured personal loan is if
you default on the loan and fail to repay it, the collateral used to secure the loan can be seized by the lender.
If you do not have any collateral to put up for security, then you would not be able to qualify for a secured loan. On
the other hand, and unsecured loan does not require any collateral. That is why unsecured loans are a great
option for non-homeowners.
The requirements for an unsecured personal loan rely on the borrower’s credit history. Since there is no collateral
securing the loan, the lender has to base credit-worthiness of the borrower on his or her past credit activities.
The higher a credit score the borrower has the more likely for approval they will be. A good credit score can also
guarantee a higher loan amount and a lower interest rate. If you have poor credit, you could still qualify for an
unsecured loan but expect to pay a much higher interest rate.
There are some really great deals and interest rates on unsecured loans these days. But all in all, usually the limit
on an unsecured loan will be lower than the limit for a secured loan and the interest rates are usually higher. Visit
http://www.easy-approval-personal-loans.com to apply online for a unsecured personal loan today or to learn more.
About the author: This article was written by Beth Pardue who has over 10 years of experience in the financial industry assisting
clients with assorted financial needs. To learn more about your personal loan options or to apply for a personal loan online please
visit: http://www.easy-approval-personal-loans.com
and longer terms to repay the loan compared to an unsecured loan. The downside to a secured personal loan is if
you default on the loan and fail to repay it, the collateral used to secure the loan can be seized by the lender.
If you do not have any collateral to put up for security, then you would not be able to qualify for a secured loan. On
the other hand, and unsecured loan does not require any collateral. That is why unsecured loans are a great
option for non-homeowners.
The requirements for an unsecured personal loan rely on the borrower’s credit history. Since there is no collateral
securing the loan, the lender has to base credit-worthiness of the borrower on his or her past credit activities.
The higher a credit score the borrower has the more likely for approval they will be. A good credit score can also
guarantee a higher loan amount and a lower interest rate. If you have poor credit, you could still qualify for an
unsecured loan but expect to pay a much higher interest rate.
There are some really great deals and interest rates on unsecured loans these days. But all in all, usually the limit
on an unsecured loan will be lower than the limit for a secured loan and the interest rates are usually higher. Visit
http://www.easy-approval-personal-loans.com to apply online for a unsecured personal loan today or to learn more.
About the author: This article was written by Beth Pardue who has over 10 years of experience in the financial industry assisting
clients with assorted financial needs. To learn more about your personal loan options or to apply for a personal loan online please
visit: http://www.easy-approval-personal-loans.com
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