What Are Secured, Unsecured Loans and Mortgage Loans?

0 Flares Twitter 0 Facebook 0 Google+ 0 0 Flares ×

These are different types of loans. There are several different loans out there.

A secured loan is when an asset of the borrowers is held as collateral against the loan that they have applied for and gotten. The asset usually has to be the value of at least half the loan that is being taken. The asset must be completely and wholly owned by the borrower. There might be certain companies that will allow an asset to be used as collateral if it is very close to be being paid off in it’s entirety. In these cases, if there is a situation at occurs where the borrower is unable to pay the loan back in a timely manner, then the asset is repossessed by the lenders. It is extremely important for the borrower to make an informed decision on what they are able to afford. Taking a good hard look at their financial situation is step number one. Figure out the amount that can be paid on a monthly basis and do not over promise anything to the lenders. Be transparent about your situation from the start so as not to fall into a deeper financial hole.

secured-loan-vs-unsecured-loan

An unsecured loan is the best type of loan to apply for if your aim is to buy a personal item such as a car. This is an amazing loan to take if you have a low credit history. Your interest rate will be nice and low and thus affordable. In this case, you will not have to put up an asset as a collateral as is the case with secured loans. There is a trust factor based on your previous good credit history. Lenders know that you are responsible and will most likely pay your bills on time with the correct amount. Hence they are less wary of lending money to you and do so happily!

This is a Secured Loan. It is used by purchases or property to get enough money to buy their property. Existing property owners might use this as well, to be able to raise funds for a situation they might be in. Basically the loan is secured on the property of the borrower. The property is basically allowed to be moved into, but is not yet fully owned by the borrower. The borrower can continue living in the property while paying off the loan and the interest that has been agreed upon taking into consideration different things such as credit rating, yearly salary and so on so forth.

This also means that in case the borrower defaults on the loan, then the lenders are able to sell of the property to recover their loan. This is called repossession or foreclosure.

Mortgage460

Submit a Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

0 Flares Twitter 0 Facebook 0 Google+ 0 0 Flares ×