Various Aspects of Secured and Unsecured Loans to be Aware of

When you apply for a loan, you can choose between secured or unsecured. Secured loans allow you to opt for higher borrowing at lower interest rates, whereas unsecured loans can be approved much faster, as the borrower does not have to provide any collateral against the loan.

What are Secured Loans?

In the case of secured loans, you will have to pledge some assets to the lender as collateral. You might also be asked to pay an additional top up if the initial assets value was not equal to that of the loan.

This security measure is taken so that the lender is able to recover the money you owe by selling the assets that you have pledged if you fail to pay them back. The interest rate in secured loans is either at a fixed or a floating option.

Unsecured Loans

When it comes to unsecured loans there is no need to provide or offer any assets as collateral. However, the downside of such loans is that the interest rates tend to be typically higher, usually being given on a fixed rate bases.

If there is a default on the loan taken out by the borrower, the lender will not be able to seize any of their property or assets to repay it. Although they can make a report regarding the late payment, which will affect negatively affect your credit score. It’s important to note that this can happen for both secured and unsecured loans. You can get more information on the benefits of unsecured loans and payday loans in South Africa from sites such as Wonga.co.za.

Why Secured Loans are Extremely Popular

Many people prefer to opt for secured loans if they don’t have a very good credit history. The reason for this is that an unsecured loan is very difficult to get unless your credit score is close to perfect. As with that perfect score, lenders feel that they are exposed to lowered risks, trusting that the borrower will pay back the loan with no issues.

Another reason why people choose secured loans is that the majority of the time the loan limit is higher, and this maybe a necessary matter for the borrower who needs the finances. If you do take out a secured loan, you need to look into the interest rates and the dates that you are required to repay the loan back, if there is more than one.

2 Responses to “Various Aspects of Secured and Unsecured Loans to be Aware of on “Various Aspects of Secured and Unsecured Loans to be Aware of”

  • I am searching for a guaranteed loan and that i have terrible credit. I’ve a little of equity within my property and would possibly even think about a re-mortgage if figures look great. My current mortgage is not great…

    Does anybody be aware of best companies to visit with this kind of factor?

    Thanks.

  • Basically had a guaranteed loan against my house and that i sell me home, must i pay my unsecured loan off after i sell my house? Or can one keep having my loan and repay it each month for that term from the loan?

    No, I’m not speaking in regards to a home loan. A guaranteed loan against my house- will i pack that when I sell my house or otherwise?

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