Secured and Unsecured Loans

Tell me about Secured and Unsecured Loans

Each type of loan differs, from the different repayment terms and the different levels of interest rates offered.

Your own independent circumstances will depend on the type of loan that is available to you.

There are two main types of loans secured and un-secured.

A secured loan requires some sort of security normally in the form of a home or car. By securing the loan with a type of collateral, the lender is protected if the borrower fails to make repayments on the loan, the lender will then make moves to take ownership on this security.

The advantage of a secured loan means that there is a higher chance of borrowing a larger sum of money with lower interest rates, and these types of loans are readily available.

Un-secured loans don’t require a form of security; therefore if the borrower fails to make or keep up repayments on the loan, there is no risk of losing a car or home, but the borrower runs the risk of legal action.

With un-secured loans a lender will make the decision to lend based on the applicants personal circumstances, factors such as employment status, annual income and credit history will be taken into account when making the decision to lend.