Secured Loans vs. Unsecured Loans: Facts You Need to Know

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Secured Loan VS Unsecured Loan
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Secured Loans vs. Unsecured Loans Facts You Need
to Know
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Obtaining a loan can be tricky. One of the most
important things to know is which type of loan is
most suitable for your needs. A loan can be
divided into two major categories a secured loan
and an unsecured loan.
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What is the difference between an unsecured loan
and a secured loan? The difference can be summed
up as follows A secured loan is backed up by
something you own generally your home or your
car which the bank can take if you fail to pay
them back. In an unsecured loan however, no such
backups are offered.
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Secured Loans
The Benefits of a Secured Loan
In a secured loan, you offer an asset to the bank
as collateral. This means that if you fail to pay
back the loan, the bank can seize the property
that you offered. Because the bank knows that it
has that option, it views a secured loan as a
safe investment, making secured loans easier to
obtain and making them available with lower
interest rates than unsecured loans.
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The Drawbacks of a Secured Loan
Secure loans may be used for lump-sum payments,
such as a home equity loan, or for loans
involving smaller payments over time, such as a
mortgage or when refinancing. In addition to
having lower interest rates, secured loans often
have longer repayment time-frames and higher
borrowing limits than unsecured ones.
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Unsecured Loans
The Benefits of a an Unsecured Loan
An unsecured loan is a loan for which you dont
offer something you own as backup that the bank
can seize if you dont pay them back. Unsecured
loans may be used for a variety of purposes,
including student loans and personal expenses.
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So what does it All Mean?
Now that you know the difference between secured
loan vs. unsecured loan, its time to figure out
which type of loan works for you Do you own a
house, car, or other large asset that you can
offer as collateral? Do you want a large,
one-time payment, or do you prefer smaller
payments spread out over a wider time-frame? How
much money are you looking to borrow, and what is
your ideal repayment schedule? Can you afford a
loan with a higher monthly interest rate?
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For more details about Secured Loan VS Unsecured
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loans-vs-unsecured-loans-facts.html
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