By Beth Pardue
This is a common question that many consumers have. Many people
do not realize that there are even different types of personal
loans. Each type of personal loan, secured and unsecured, have
different requirements.
We will look at the requirements for a secured personal loan
first. The name “secured loan” pretty much sums it up, to obtain
a secured loan the borrower is required to provide some kind of
collateral to secure the loan.
The most common forms of collateral used to secure loans are
personal property such as your home, land or automobile. When
your home is used as collateral, you will often hear the loan
referred to as a home equity loan or a second mortgage loan.
Personal loans can also be secured with stocks, bonds,
certificates of deposit, a savings account, etc.
Lenders tend to be more flexible when granting secured loans.
Usually the borrower is given a lower interest rate and longer
terms to repay the loan compared to an unsecured loan. The
downside to a secured personal loan is if you default on the
loan and fail to repay it, the collateral used to secure the
loan can be seized by the lender.
If you do not have any collateral to put up for security, then
you would not be able to qualify for a secured loan. On the
other hand, and unsecured loan does not require any collateral.
That is why unsecured loans are a great option for
non-homeowners.
The requirements for an unsecured personal loan rely on the
borrower’s credit history. Since there is no collateral securing
the loan, the lender has to base creditworthiness of the
borrower on his or her past credit activities.
The higher a credit score the borrower has the more likely for
approval they will be. A good credit score can also guarantee a
higher loan amount and a lower interest rate. If you have poor
credit, you could still qualify for an unsecured loan but expect
to pay a much higher interest rate.
There are some really great deals and interest rates on
unsecured loans these days. But all in all, usually the limit on
an unsecured loan will be lower than the limit for a secured
loan and the interest rates are usually higher. Visit
http://www.easy-approval-personal-loans.com to apply online for
a unsecured personal loan today or to learn more about your loan
options.
About the Author: This article was written by Beth Pardue who
has over 10 years of experience in the financial industry
assisting clients with assorted financial needs. To learn more
about your personal loan options please visit:
http://www.easy-approval-personal-loans.com Note: This article
may be freely reproduced as long as the authors bio paragraph at
the bottom of this article is included, the article is published
“as is” (unedited) and all URL’s are made active hyperlinks with
no syntax changes.
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