The difference between secured loans and unsecured loans
By Mark Lambie
There are many reasons why people get loans. Perhaps they want to enjoy a
once-in-a-lifetime opportunity that will never come their way again. Or perhaps
they need to fix up the house to get it ready to sell. Or perhaps they need to
make a financial decision to consolidate their debts in order to reduce their
monthly payments and lengthen the term to pay back their loans. Whatever
the reason many people are looking to loans to help them reach their financial
There is nothing wrong with using loans to reach your financial goals. In fact, a
loan can be an excellent tool to add to your financial portfolio because it can
help you leverage your current position. But which loan is the right loan for
There are basically two kinds of loans. Unsecured loans and secured loans
are the two kinds of loans that you have available.
Secured loans are loans in which you offer the lending institution some kind of
guarantee that they will receive payment for the loan. The example of a
guarantee might be some assets that you have, like your house or your car or
stock certificates. Although you don't have to turn them over to the lending
institution in order to get the loan, having them in your possession assures the
lending institution that if you are to default on your payment they would have
something to seize and sell to recover their losses.
On the other hand, an unsecured loan is a loan in which you simply use your
credit rating to help you borrow money from the lending institution. People
who do not have assets or do not want to provide assets as a guarantee may
prefer this type of loan as an alternative.
So which one is the better loan? While every case is different, you should
consider what is important to you. For many people getting a good deal on a
loan means getting a low interest rate, a high amount of available loan, and a
long repayment period.
If that describes you then you probably want to go with a secured loan. Why?
It's simple. Lending institutions determine the amounts they're willing to lend,
the interest rates they will be lending at, and how soon they want the money
back based on the amount of risk they are taking to give up the money. While
a person with a good credit rating may not be a big risk, the risk is still greater
than with the person who has some assets to back up the loan if they are
unable to pay with money.
So it may be the right one for you. A secured loan is the right option for many
people because it provides a greater amount of available lending cash, a
lower interest rate, and a longer term to repay.
About the Author
Mark Lambie is the founder of Loan Source, a website for UK residents seeking secured loans. Visit our website today for a free Home Owner Loan quote and find out how much we can save you.
Article Source: http://www.simplysearch4it.com/article/22889.html
|If you wish to add the above article to your website or newsletters then please include the "Article Source: http://www.simplysearch4it.com/article/22889.html" as shown above and make it hyperlinked.|
| Some other articles by Mark Lambie|
|Four ideas to make more money|
Make more money. If only it were that easy! If only you could snap your
fingers and find that you have increased your income!
How to deal with rising prices and diminishing income
We definitely don't live in a world that lets us save our money in order to
something. Sure, it may have been that way in ...
Financial planning and insurance
There are many things that are a key part of your financial plan. Budgeting
is important. So is investing. Estate and tax planning are ...
Ideas to help you manage your finances
A big part of budgeting and financial management is making sure that you
have enough money each month to pay your bills. Many people ...
Another way to budget
Everyone knows that a budget is important for you to help you plan your
finances. That way your expenses won't outstrip your income in that way you
won't end up ...
Fix your credit report to get a loan
We're not on this planet for very long, so while we're here, we might as
well enjoy it. So you should buy things. Sure, you're smart enough to not
run out and buy ...