Difference between secured and unsecured loans can help one decide which option will be the most suitable. Depending on one’s current financial condition, assets and income, one can decide on the best possible loan.
In these loans, the bank or loan provider will give money against an asset belonging to the borrower. The assets can a home, car, investments or any asset that can be converted to cash.
In these loans, the lender gives money without gaining access to any asset of the borrower. These are generally given on the basis of good credit history and stable income of the borrower.
Secured loans are charged with low rates of interest when compared to other types of loans.
As there is a risk associated in case the borrower can repay, the interest rate in such loans are quite high.
Secured loans have a longer term period. Some may extend up to 30 years, depending on the asset.
These are given for a short period of time, which is around one to five years so as to lessen the risk to the lender.
These types of loans are approved even if you have a relatively low credit score. If your credit file shows some missed repayments then you can get secured loans as their main collateral for the loan.
These loans are given to people with excellent credit history, good credit score and responsible borrowing behaviour. Some banks even require the borrower to have an account with them.
You can get a much higher amount by putting assets like a home and car at stake.
The amount of loan is generally low, around £25,000.
The approval process goes through various stages of verification and so, it takes time to get a secured loan approved.
As there is less paperwork associated with these loans, the approval process is quite quick.
To find which type of loan is the best fit for you, just check our website freepricecompare.com or call us on 02034757476.