Secured Loan 101

The world of loan packages is separated distinctly into two major categories – unsecured loans and secured loans.

Unsecured loans are the most commonly sought after type of loan available because they do not require you to “secure” that loan with any collateral, whereas secured loans are the exact opposite and require you to put up something the lender can use as payment if you aren’t able to meet your financial obligations.

Unsecured loans are more difficult to be approved for simply because they only use your credit history and your personal word as security, whereas secured loans are a lot easier to be approved for if you have collateral valuable enough to lockdown that loan in the first place.

At the same time, you need to be sure that you know exactly what you’re getting into when you apply for a loan and when you put up collateral. That collateral is going to have a lien legally placed upon that possession throughout the entire duration of your loan, and will continue to have that lien placed upon it until the principal and all interest have been repaid.

Secured loans open up a lot of financial opportunities for individuals that might not have been able to get a loan without any security and without any collateral. Those with less than picture-perfect credit scores regularly take advantage of these kinds of loans, rebuilding their credit and moving towards unsecured loans in the process.

Mortgages, vehicle loans, and secured credit cards are just some of the most common types of secured loan packages that you are likely to come across. It’s important to know exactly what you’re getting into before you sign on the dotted line and agree to any terms when taking advantage of any type of financing, but it’s especially important when you’re looking to move forward with secured loans that require collateral parent