About Secured Loans And Non-Secured Loans
Giving loans is one of the oldest businesses in the history of mankind. Giving loan is a simple process where one person lends money to another person and in return the other person can pay this money back after some duration with some additional money as interest. In current times, the concept of loans is still the same but the terms and conditions make it a very complex process.
Usually, there are two kinds of loans available in market now days. First one is called a secured loan and the second one is called non-secured loan or unsecured loan. A secured loan is a loan in which the lender is sure to get his money back since the person borrowing the money keeps some kind of collateral with the lender. This collateral is something valuable like home, property, jewelry or car.
This way, the lender has low risk associated with the loan since he can always recover the money lent to the borrower in case the borrower defaults on his payment. Since the risk of loan is low, the loan is also cheap and interest rates are low.
The unsecured loan or the non-secured loan does not involve any kind of collateral. In this kind of loan, the lender lends money to borrower purely on the face value of the borrower. He decides the eligibility of the borrower based on the past credit history of the borrower. If the credit history is good, the borrower gets the loan with low rate of interest. In case the credit history is not so good, he will have to pay higher rate of interest since it involves more risk for the lender.
Which loan is best for you depend on your situation and credit history? If you have a good credit history, you should go with non-secured loans since you will not have to give any collateral to the lender.
Usually, there are two kinds of loans available in market now days. First one is called a secured loan and the second one is called non-secured loan or unsecured loan. A secured loan is a loan in which the lender is sure to get his money back since the person borrowing the money keeps some kind of collateral with the lender. This collateral is something valuable like home, property, jewelry or car.
This way, the lender has low risk associated with the loan since he can always recover the money lent to the borrower in case the borrower defaults on his payment. Since the risk of loan is low, the loan is also cheap and interest rates are low.
The unsecured loan or the non-secured loan does not involve any kind of collateral. In this kind of loan, the lender lends money to borrower purely on the face value of the borrower. He decides the eligibility of the borrower based on the past credit history of the borrower. If the credit history is good, the borrower gets the loan with low rate of interest. In case the credit history is not so good, he will have to pay higher rate of interest since it involves more risk for the lender.
Which loan is best for you depend on your situation and credit history? If you have a good credit history, you should go with non-secured loans since you will not have to give any collateral to the lender.
About the Author:
The author is an expert on loans and writes articles on different types of loans including secured loans and non secured loans.