A personal loan is one wherein the borrower receives consumer credit for personal use. There are two different kinds of personal loans. When secured personal loans are applied for, the borrower has to pledge an asset to the lender, which will serve as collateral. When the borrower fails to make payments, the lender has the right to repossess the asset and sell it to regain the money for the debt. On the other hand, an unsecured personal loan does not require any collateral to hold up the debt.
But how can a secured personal loan better than an unsecured loan?
- There is a higher chance of obtaining flexible terms
In the case of a secured loan, the borrower provides the lender with something to make sure that the loan will be paid in the form of collateral. Since there is collateral to hold onto, the lender will be more likely to agree to favorable lending terms. They may agree to fair interest rates and possibly even lower fees.
- It is easier to obtain
Since unsecured personal loans do not require collateral but lenders are stricter with the requirements for application. All who attempt to take out an unsecured loan must have good credit. For married couples, one spouse can even affect the score of the other. On the other hand, applying for a secured loan can be a little less of a hassle. There are fewer requirements and sometimes, good credit is not the primary basis for approval.
- The borrower won’t go into further debt
In an unsecured loan, lenders will impose harsh penalties for late payments, compounding the original lack of funds. They may offer to ‘easier’ payment terms, but that only takes a greater toll in the long run. If, on the other hand, a borrower can’t pay a secured loan, then at least they already know what they’re in for.
Make sure to learn more about secured personal loans from quickcashfundingllc.com before making any decisions.