There is more than one type of loan. Depending upon your situation, you might find that what works in one circumstance does not work in another. This means that it is very important for you to educate yourself about different kinds of loans so that you are more prepared when you speak with a lending officer, or with a financial counselor. It is especially important that you understand what the different sorts of loans entail so that you are not pushed into making a wrong decision by a lender that is more interested in a percentage rather than your financial well being.
Understanding the difference between a secured loan and an unsecured loan.
At their very basic, loans come in two kinds: secured and unsecured. Whether you are looking into business loans or personal loans, they will either be secured or unsecured. Credit cards, which are basically consumer loans, are also denoted with these names. However, you will find that most credit cards are unsecured, unless they have a very high limit.
A secured personal loan is one that requires a form of collateral. Collateral is something of value that the lender can possess if you fail to meet your obligations. A home loan is a secured loan. If you default, then the lender can take your home to cover its costs. Auto loans and car title loans are other examples of this. It is also possible, for smaller loans, to offer valuable jewelry or electronic equipment as proof that you will pay back the money you borrow. However, it needs to be something that the lender feels it can use to recover its loss should you default. If you are seeking a bad credit loan, more than likely you will have to put forth some collateral. When you have less than favorable credit, you are immediately seen as a higher risk, and therefore must offer something to justify the risk the lender acquires in allowing you to borrow money.
Unsecured loans are the opposite. They require no collateral. As mentioned previously, credit cards are a form unsecured loans. Many banks offer small signature loans. These are usually loans of between $500 and $3,000. Most unsecured debt comes in smaller amounts. This is because if you stop making payments, the lender loses what you have been lent. They can turn you over to collections, and can call demanding payment, but, ultimately, if you have no money and cannot pay, the lender loses out. However, the cost to you is also great. Your credit is effectively destroyed, making it next to impossible for you to get a mortgage in the future. It can even hamper your chances of receiving approval for an auto loan or a credit card.
Any loans you take out, whether they are secured or unsecured, are reflected in your credit report. It is important to establish a pattern of responsibility fulfilling your obligations in full, and in a timely manner.
You may freely redistribute this article on your website providing no alterations are made to the text and the links remains intact.
This article is courtesy of http://www.4a-loan.co.uk
For loans & finance please visit us http://www.4a-loan.co.uk
Laws have been created to protect people against "Loan Shark"... Read More
A title loan is a loan of money secured by... Read More
A student loan is an unsecured loan made by lenders... Read More
Whether your payday arrives every Friday or every other Friday,... Read More
Payday loans have many names -- cash advances, signature loans... Read More
If you're in a crunch for money, either because of... Read More
Did you know that if you have a home that... Read More
Listed below are some of the reasons for choosing a... Read More
Are you paying out too much every month for your... Read More
The bad news about attending college is that it costs... Read More
Payday loans are loans of a small amount, taken for... Read More
If you've got a really unmanageable amount of credit card... Read More
A bridging loan as the name implies is a loan... Read More
Sometimes finding fast homeowner loans can seem impossible? no matter... Read More
Under the microscope loans for military really are different from... Read More
Military signature loans are easy to come by. When looking... Read More
Daughter's marriage or her studies? Son's Ambition? Want a House... Read More
Student loans seem to be the only feasible way out... Read More
Have you noticed that everyone seems to have a newer... Read More
So you have decided you want a motorcycle and you... Read More
Applying for a payday loan online is a quick and... Read More
It is quite common for someone, who is having trouble... Read More
It has always been an issue for home buyers to... Read More
'Bad' means 'bad' no matter where you go! It is... Read More
The internet is teeming with lenders who are vying for... Read More
A no income verification home equity loan is a second... Read More
Worried about how to apply for a business loan? Although... Read More
When looking for loans for bad credit, many people find... Read More
Here is a useful guide to Home Improvement Loans. What... Read More
A buyer of a new home may find himself or... Read More
There are times when a cash advance loan or payday... Read More
Because of the Internet, quick payday loans are faster than... Read More
Some weeks it feels like you're living hand to mouth.... Read More
Whether you have good credit, bad credit or no credit,... Read More
If you're looking for a fast homeowner loan, you might... Read More
Laws have been created to protect people against "Loan Shark"... Read More
Have you noticed that everyone seems to have a newer... Read More
Most Internet users are now extremely comfortable using the Internet... Read More
Martin graduated of the college with dreams of a highflying... Read More
Here is a useful beginner's guide to bad credit secured... Read More
The revolution that has affected everyone's financing technique is online... Read More
Have you ever wondered what is credit scoring? Credit scoring... Read More
Are you a pensioner applying for a loan? Here are... Read More
Are you wondering why choose a personal loan? One of... Read More
If you're in the process of trying to find home... Read More
If you spend more than you earn on a regular... Read More
A second mortgage is a loan that is secured by... Read More
"All work and no play makes jack a dull boy".The... Read More
If you're looking for an online loan, you might be... Read More
No one can say for certain where the history of... Read More
So you are engaged. Congratulations. It was not easy. What?... Read More
A second mortgage is a loan that is secured by... Read More
What are the opportune times to avail of military payday... Read More
Payment protection plans are offered by payday companies to protect... Read More
There are many types of loans available to consumers. There... Read More
A bridging loan as the name implies is a loan... Read More
Online car loan shopping practically guarantees that you are getting... Read More
Is factoring a type of loan?No. Even though invoice factoring... Read More
There are lots of ways to get additional capital to... Read More
Are you paying out too much every month for your... Read More
Secured Personal Loans are those loans against which you don't... Read More
Personal loans are offered by lenders such as banks and... Read More
A Home loan is the generic term for a loan.... Read More
No faxing payday loans are the wave of the future.... Read More
A $500 payday loan can be a real life saver... Read More
If you are a homeowner in need of a home... Read More
Loan |