What Is The Difference Between A Secured And Unsecured Loan???

Answer 1

A secured loan is like a mortgage if you default on the payments you can loose your property An unsecured loan is just that unsecured if you default on the payments you end up in court and can end up with bailiffs on your doorstep.Secure loans tend to have a better interest rate and be for higher amounts (genrally over £5000) unsecured have a higher rate of interest and are usually for under £5000

Answer 2

A secured loan is one in which the provider of loan requires security for their money and unsecured loan is one in which the provider (lender) does not need security.

If the borrower cannot pay his /her debt then the lender of the secured loan can sell the secured asset and get their money back which the lender of unsecured loan cannot do.

Security could be in any form like borrower can provide security against his/her assets. Assets includes land, building or any other expensive assets .

Usually the secured loan has low interest rate because the lender takes less risk but unsecured loan usually has high interest rate because the lender takes high risk by providing the loan without security.The risk means that the borrower does not repay the interest or principal of the loan.

Hopefully this explanation is enough.

Answer 3

Hi - A secured loan would be one that would have (often) your home, if you own it, as security against you failing to meet the repayments. If you default on the payments you could lose your home.
An unsecured loan involves, theoretically, a bigger risk because the lender has no means of 'clawing back' anything, if you don't pay them. Usually an unsecured loan would have a higher rate of interest charges on it because of the higher risk involved for the lender.

Answer 4

A secured loan does usually have your property as the security and does provide a cheaper interest rate but there are set up charges involved in the security...
you would have to check to see if this is the case and how much they are.
if you only wish to borrow short term you are probably better off going the unsecured route but if its long term then the set up charges are a once only fee and the fact that the interest rate is cheaper will mean that this is the cheaper option.

Answer 5

A secured loan means that you have something of value which the loan company can take if you don't keep up payments. eg house.
Unsecured loans are usually at higher interest rates, because if you can't pay the loan company loses their money.

Answer 6

Secured loans are loans, which have collateral. attached to them in the form of a lien. A lien is a legal claim on one's property till a debt secured by the property is paid off. In other words, a lien gives the right to claim a person's property if an obligation is not discharged.

Unsecured loans allow you to obtain services or goods on credit in exchange for your verbal or written commitment to pay the creditor back. These loans are not secured by collateral. Such loans involve medical bills, credit cards, commercial loans, consumer debt and personal loans.

Answer 7

A secured loan is a loan that is secured on an item, ie if you default on the loan the item can be reposessed. An unsecured loan is not secured on anything.

Answer 8

one is secured on your property and the unsecured is usually on your credit rating, so if you have a good credit rating the unsecured loan will be the best as the apr will be a lot better.

Answer 9

A secured loan always uses a substantial assett such as the borowers house as collateral, an unsecured one doesn't!

Answer 10

Mahjabeen is the most correct because he keeps it general. A secured loan might be not be secured on your property, but on the guarantee of a third party.