Loans- Different loan types - Secured Loan and Un secured loan

Secured Loans :

Secured loans are those loans which are backed by some security (generally an asset like house, property or automobile etc) offered as collateral in order to decrease the risk assumed by the lender. The main reason for submitting the security is that if one is not able to pay the amount of loan availed , the lender realizes the amount by auctioning/selling off (or by making some other arrangement) the asset pledged as security. Lenders often look at the credit score while providing a secured loan, so it is imperative to showcase the positives while applying for a secured loan so that one can look forward to negotiate the interest rate too. Secured loans are needed for the home equity, mortgage, purchasing automobiles purposes.

Unsecured loans :

Unsecured loans are called so because they are not backed by any security or require no collateral. Since the person or financial institution does not hold anything as security so having an excellent credit score becomes a natural requirement for the borrower. The lender takes bigger risk than a secured loan. The rate of interest is high in case of unsecured loans but it also diverges according to ones credit history. These are also called signature loans as the only thing the lender possesses is the signature of the borrower. There are many types of unsecured loans available in the market.. There are debt unsecured loans. Debt unsecured loans are also available online and the cash is deposited instantly into the account of customers. Another type of unsecured loans is unsecured debt consolidation loans. Unsecured debt consolidation loan have the same features which every loan has after being consolidated. Unsecured debt consolidation loan combine a number of loans into one and enable the customer to pay the loan as one.

There are also guaranteed unsecured loan. These loans are not with equity but there is a guarantee in papers. Guarantee unsecured loans have interest rate lower than other unsecured loans and higher than secured loans. So guarantee unsecured loans are much better than unsecured loans. There are also guaranteed unsecured loan. These loans are not with equity but there is a guarantee in papers. Guarantee unsecured loans have interest rate lower than other unsecured loans and higher than secured loans. So guarantee unsecured loans are much better than the unsecured loans.

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