Priority Plus Financial — Understanding the difference between secured and unsecured loans
Priority Plus Financial — Understanding the difference between secured and unsecured loans When you need to borrow money, you have a range of options to choose from. However, the two most common types of loans are secured and unsecured loans. A secured loan is backed by collateral, which means that the lender can seize the asset if you fail to repay the loan. On the other hand, an unsecured loan doesn’t require collateral, but it may come with higher interest rates and stricter eligibility criteria. Understanding the difference between secured and unsecured loans is crucial to make an informed decision. Secured loans are usually used to finance big-ticket purchases like a car or a house. The collateral serves as a form of security for the lender, which means that they can recover their funds by repossessing the asset if you default on the loan. Secured loans are attractive to lenders because they carry less risk. As a result, they often come with lower interest rates ...