Phantasm
Banned
Secured personal loans are different from unsecured ones simply because they either have collateral or not:
Secured Personal Loans: In secured personal loan, you need to have some kind of collateral that serves as a guarantee for the loan. Examples of such securities include houses, cars, savings account and other assets that can be easily converted into cash. If you fail to pay back the loan on time, the lender will take your property and sell it in order to recover his or her money.
A number of merits come with this type of personal loans;
- Secured loans are typically easier to get than unsecured loans since the existence of a collateral reduces risks.
- The lower interest rates arise due to provision of security by the asset which could otherwise be lost in the event of defaulting on payments.
- This is because there is an assurance through the pledged item which makes them more willing to give out more loans.
However, borrowing against ones assets has three main disadvantages:
- Risking loss of Collateral– if one does not repay it, creditors can take away and sell your collateral so as to refund themselves thereby making it prone to risk
- However, there is an extended approval process where there may be additional documentation required followed by evaluation so that appraisal reports on the same may take place before any further step is taken regarding this case.
Secured Personal Loans: In secured personal loan, you need to have some kind of collateral that serves as a guarantee for the loan. Examples of such securities include houses, cars, savings account and other assets that can be easily converted into cash. If you fail to pay back the loan on time, the lender will take your property and sell it in order to recover his or her money.
A number of merits come with this type of personal loans;
- Secured loans are typically easier to get than unsecured loans since the existence of a collateral reduces risks.
- The lower interest rates arise due to provision of security by the asset which could otherwise be lost in the event of defaulting on payments.
- This is because there is an assurance through the pledged item which makes them more willing to give out more loans.
However, borrowing against ones assets has three main disadvantages:
- Risking loss of Collateral– if one does not repay it, creditors can take away and sell your collateral so as to refund themselves thereby making it prone to risk
- However, there is an extended approval process where there may be additional documentation required followed by evaluation so that appraisal reports on the same may take place before any further step is taken regarding this case.
