Loans - What is the difference between secured and unsecured loans?

 
 
 

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What is the difference between secured and unsecured loan?

The main difference between these loans is whether you are putting any of your possessions, usually your house or car, us as collateral against your loan.

Unsecured loans are ones in which you take out a loan without offering any form of collateral. The annual percentage rates are usually higher on this type of loan.

With a secured loan you offer up a possession of significant value to replace repayments in case you are unable to pay back your loan. This possession is usually your house but could be your car or any other item that has enough value. Loans of this type are usually larger in amount and term and usually come with a lower annual percentage rate.

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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPATMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT
MISSING PAYMENTS WILL HAVE SEVERE CONSEQUENCES AND MAY MAKE OBTAINING CREDIT MORE DIFFICULT IN THE FUTURE.

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