Secured vs Unsecured Personal Loans: Knowing their Differences
Personal loans have transformed over the years to keep up with the changing demands of the consumer. It used to be next to impossible to procure a personal loan with a weak or bad credit history, but now there are loan alternatives for people with poor credit and those without a complete financial track record.
Reasons for Taking Out a Personal Loan
A personal loan is offered to you as an individual, for meeting your personal expenses and is based on the data provided when you apply for one. Here are the primary reasons why people take out a personal loan:
- Debt consolidation
- Pay off credit cards
- Home improvements
- Car or van
- Luxury items
- Family event
- House move
- Home emergencies
- Medical expenses
While you may consider different loan options depending on what you need the loan for, you may also explore secured and unsecured personal loans.Related Article: 6 Facts You Need to Know About Unsecured Personal Loans
Secured Vs. Unsecured Personal Loans
Here are some of the top differences between a secured and unsecured personal loan:
Collateral Requirement - You need to provide collateral against the secured loan while an unsecured loan does not require any collaterals.
Interest Rate - The interest rate is lower in the case of a secured loan, whereas, the interest rate is higher for an unsecured loan.
Loan Amount - The loan amount is more substantial in the case of a secured loan in comparison to an unsecured loan.
Risk Involved - The lender has smaller risk compared to the borrower in the case of a secured loan, but in the case of an unsecured loan, lenders are at higher risk, and the borrower has to pay higher interest on the loan.
Examples - Secured loans include mortgage, housing loans, auto loans, and more, whereas, unsecured loans include personal signature loans, personal lines of credit, credit card loans, etc.
Whatever your purpose for taking out a loan, we are here to help. Apply for an unsecured personal loan from CashOne today!
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