Personal loan
Did you know that your home's equity is one of the best sources of cash? Interest rates are typically quite low. With equity, you can finance big-dollar expenses, such as car purchases, home remodeling, or medical expenses. Of course, you are funding these things with a secured loan if you chose to use equity; your home is the collateral. But, if you have the discipline to make the payments, you can save a lot of money over using credit cards.Unsecured Loans
An unsecured loan is a loan that is not backed by collateral, only your signature (signature loan) When you borrow money, the lender may require nothing more than your promise to repay the debt. Unsecured loans usually involve less documentation.Obtaining an unsecured loan is usually quicker and does not require a formal closing. There is usually just an application, a promissory note, and perhaps a payment schedule. This differs from a loan involving collateral. As any homeowner can tell you, you can get writer's cramp signing all the papers that are required to document a mortgage or home equity loan.
What is a secured loan?
A secured loan is a loan backed by collateral. When you borrow money, the lender may or may not require you to pledge collateral to guarantee repayment of the debt. If collateral is pledged, then you have a secured loan.Collateral can be anything of value. (It can be money, real estate, automobiles, future interests, personal belongings, business assets, livestock, or anything else that has worth.)
Remember: On secured loans, If you do not repay what you borrow, then the lender may use your collateral to satisfy the debt. Equity is an often overlooked source of money, and is a great way to pay for things you need. Equity is much more cost efficient than high interest credit cards. But make sure you can make the payments, on time, every month.
Article last changed on: 12-01-2008 at 17:52
