Difference Between An Unsecured Loan & Secured Loan

Are you considering getting a loan, but you need help deciding whether to get a secured loan or unsecured loan? Before applying for one, you will want to know the difference between the two. Below is an explanation of what a secure loan is and what an unsecured loan is.

Secured Loans

Secured loans require you to have something of value, such as a car you own, your home or other types of personal property. Your valuables is used as collateral, and this collateral is held by the lender, and you receive it back when the loan has been paid in full. However, the lender can keep your possessions if you do not repay the loan. The good news is that you usually have a longtime to pay a secured loan back.

secured and unsecured loans

Unsecured Loans

You don’t need any collateral or valuables in order to get an unsecured loan. However, fixed interest rates and fixed terms are usually attached to most unsecured loans. When you get approved for an unsecured loan, you will have to pay it off within a certain amount of time and your monthly payment towards the loan will be the same each month. During the term of your loan, your interest rate won’t change.

That is the difference between unsecured and secured loans. It is up to you which one you want to apply for. While many may not know, there are reputable financial organizations that cater their services to offer loans for bad credit. Click on the link to learn how you might qualify today!