Secured Or Unsecured Loans Which Is Best For Me
Author: Nigel Maskery
Category: Finance
Republish this article manually
Republish articles from Finance category automatically
At some time in your life, you will probably have to borrow money. This is part of today's society where people prefer to purchase goods and services on credit rather than saving up and paying cash. The beneficial side of having to borrow money is you build up a credit history which is important for major purchases such as buying a house. If you don't have any credit history you may find it difficult to borrow money from a lot of lenders.
Which loan is best for me
There are two main kinds of loan available on the market. Unsecured and secured. These are explained in more detail below. Before selecting the sort of loan you need, take into account the following points.
1. How much money do I need to borrow.
2. Over what period do I need to borrow the money.
3. How much can I afford to repay each month (or payment cycle).
Answering these questions will help you to come to a decision on whether you should have a secured or unsecured loan.
Secured Loans
Secured loans (or homeowner) loans are secured against some form of collateral. These loans are normally secured against your car or house as they are generally a person's biggest asset. By securing your loan against an item, it allows the loan provider to sell your car or house if you fail to make your loan repayments. By having the loan secured the loan provider is taking a smaller risk in lending you money as there is a reasonable possibility of them getting their money back. This will result in a lower rate of interest been charged on the loan. Secured loans are normally taken over a long period of time and for a large amount. A good example of a secured loan is a house mortgage.
Unsecured Loans
Unsecured (or personal) loans are not secured against any assets. The lenders make their decision on whether or not to lend you any money on the basis of your credit rating. By scrutinising your credit rating helps the unsecured lender to determine the chance of you repaying the money they have lent you. If you have a poor credit rating or county court judgements (ccj's) against you name, it may still be possible to obtain an unsecured loan, however the rate of interest you will pay will be greatly increased. This is due to the increased perceived risk for the unsecured lender.
Borrowing money can be nerve racking and is a big decision in your life. Always make sure you get sound professional advice before borrowing any money and before signing any documents. Several lenders work as independent agents on behalf of the banks and major money lenders. They can supply you with free advice in the hope that you may borrow through them. Ensure that any information you are given has no strings attached and ask if there are any upfront fees for the advice. Use the internet to compare rates of interest and terms and conditions so you know you are getting the best possible deal available before making the final decision on which loan provider you will borrow from.
Resource Box:
Keywords: Secured loan, unsecured loans, borrow money, borrowing money
View Count: 94
Date Submitted: 9/12/2007
Most recent articles in
Finance category:
Other related articles in
Finance category:
Recent articles by
Nigel Maskery: