When you require financial assistance, a Loan could be the last resort solution for you. Understanding that there are various types of loans. Each design with a specific purpose. These Loans could help you, especially when you require the money to pay your bills, for repairs or the unforeseen problems in life.
If you’re looking for a loan, it is advisable to visit a trusted and licensed money lender.
Understanding the difference in loan
types could be beneficial in helping you understand what do you require.
The two main types of loans are secured and unsecured loan.
The main difference between these two loans is; Secured loan
the money borrowed is secured against and asset or a property. This assets or property will act as a security against the amount you have borrowed.
Whereas unsecured loan you do not have to offer any form of security as a guarantee.
Both loans have a different interest rates and repayment scheme.
Secured loan requires the borrower to provide a form of collateral or security to the moneylender. You are able to offer your house, or your vehicle as a form of security. But if you fail in repaying the loan within the agreed period, the lender will have the right to sell the collateral to obtain the loan amount that you have owed the moneylender. The biggest advantage of a secured loan is that you are able to borrow a bigger sum of money, with lower interests rates. Secured loan are also consider easier to obtain compared to unsecured loan.
One of the main purpose or common reason why borrowers prefer a secured loan, is to consolidate debts because Secured loans offer lower interests.
With unsecured loan
however, there is no collateral or security required when borrowing money.
The moneylender will lend you money base on your credit standing and your income. Personal loan
, payday loan are some examples of unsecured loans.