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Secured vs. Unsecured

There are two main types of loans, secured and unsecured loans. When applying for any type of credit, it is important to understand exactly what kind of loan you are applying for and what makes it different from the counter-loan-type. Below is a general comparison of secured and unsecured loans. If you have any questions, please contact us.

Secured Loans
A secured loan is when you guarantee your credit with some form of collateral. It is typical that you secure the loan with the item being financing. For example, you secure a car loan with the car being financed, or a mortgage with the home. If you don't meet the loan's payment obligations, then the item being secured will be taken away from you by your creditor, i.e. foreclosed (house) or repossessed (car). The creditor will sell the item received so that they can be reimbursed for the loan that you defaulted on. 

The one main advantage of secured loans are the interest rates. Since you are backing your loan with collateral, the interest rates are typically lower than unsecured loans.

Please contact us if you are interested in applying for a secured loan.

Unsecured Loans
Unsecured credit is a line of credit that is not secured by anything other than your 'good word' that payments will be made. Your creditor will have no form of guarantee that they will be paid. If you don't pay, there is nothing they can do. They can not come and take your home or car. As a result, the interest rates associated with unsecured loans are typically higher than secured loans.

Besides not losing any personal property if you go into default on your loan, the other main advantage of unsecured loans are that they are dischargeable in bankruptcy.

Apply now for an unsecured loan.


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