Unsecured Personal Loans vs Secured
No matter who you are and what your situation is, the term “personal loan” is likely to enter your vocabulary at one point or another. You may want to put a down payment on a breathtaking home or a heart-stealing vehicle. You may want to consolidate your credit. Alternatively, you may just want to feel secure and have funds in your bank for an emergency. No matter what your reason is for desiring a personal loan, you can qualify for one. The two most common types of such loans are secured and unsecured. Here’s a rundown on unsecured personal loans vs secured personal loans and some information on the best ways to apply:
What Is a Personal Loan?
A personal loan is a financial product that sounds like what it is. It’s a loan for you, the individual consumer, rather than a business entity. You can use a personal loan for a variety of reasons, and you can choose from an enormous number of sources for funding.
What Is an Unsecured Personal Loan?
An unsecured loan is a personal loan that some businesses and individuals refer to as a “signature loan.” They use that terminology because the lenders don’t require any type of security to solidify the advance. The borrower’s signature is all that they require other than the minimum age and income requirements to qualify them to receive the desired funding.
What Is a Secured Personal Loan?
A secured personal loan is the complete opposite of an unsecured product. The lenders require the borrowers to give up the rights to something temporarily to “secure” the loan. Such lenders want to make sure that they can get their money back even if the borrowers default on the repayments.
Oftentimes, lenders will ask the borrowers to allow them to put a lien on their homes or vehicles until they receive the funds. Stocks and bonds could qualify, but home deeds and car titles are much more popular options.
What Is Cosigning on a Personal Loan?
Some lenders offer the option for the borrower to have someone cosign for his or her advance. A cosigner is a person who can qualify for a loan because of a high credit score or glowing repayment history. This person usually has access to superb interest rates and a vast assortment of credit cards and loan products.
When a cosigner signs for someone, that person promises to assume responsibility if the other person defaults. The cosigner remains a responsible party for the duration of the loan. Those are the options that people usually have with secured loans.
Unsecured Personal Loans vs Secured Personal Loans?
When considering unsecured personal loans vs secured personal loans, you must consider that each one has several positives and negatives. The greatest benefit of qualifying for unsecured personal loans is that you minimize risk.
You receive the funds you need without having to obligate yourself to anything but making your payments on time. Another benefit of an unsecured loan is that it can help boost your credit.
If you pay your advance on time, you can see a generous increase in your overall score. The downside is that unsecured loans usually take longer to process than secured loans do. Loans from traditional banks may take several weeks to process, for example.
If you have an emergency, you may want to go the secured route. Some brands of unsecured loan products can have super-high interest rates, as well. Those are generally quick to obtain, but you may find yourself paying something in the area of 30 percent interest.
Secured loans are beneficial because you can qualify for them with just about any credit score. If credit repair or an emergency solution is your purpose for applying, then you’ll probably be happy with the secured option. The downside to the secured option is that you have a lot to lose.
If you’re confident about your ability to repay the advance, then you don’t have to worry about any of that. You can just do what you know how to do.
What Are the Different Types of Personal Loans?
Some of the most common types of personal loans are peer-to-peer loans, traditional loans, payday advances, title loans, installment loans and so on. Payday advances are unsecured, and title loans are secured. Installment loans stretch over a reasonable course of time.
Peer-to-peer loans come from your peers instead of traditional entities. You can speak with a finance specialist about which option is best for you.
What Are the Best Companies to Apply Online?
These are just a few suggestions for getting personal loans for yourself. These are great options for unsecured personal loans:
Lending Club is a peer-to-peer lending community that offers super-low interest rates and no penalties for paying the advances early. It’s for applicants who have excellent credit.
To apply for a personal loan just go to LendingClub.com
Issues Personal Loans For Fair Credit (600 – 699 Credit Scores)
Lending point is a good place to apply if you have fair to average credit scores. They actually specialize in personal loans and will lend all the way up to $20,000.
PersonalLoans.com offers loans of $1,000 to $35,000, and the applicants do not have to have amazing credit scores. They claim to have a quick turnaround time, as well. The site description says that they can send the funds to a person who applies for a personal loan within one business day.
To apply online just visit PersonalLoans.com – Get Personal Loans Up To 35,000
Other notable places to apply for unsecured personal loans are Prosper.com, Upstart and your local bank. Credit unions can also offer you personal loans, and they often offer lower interest rates than banks do. You may want to consider applying with one.
How Do You Get a Personal Loan?
The first step to getting a personal loan is to complete an online loan application. Before you apply for such a loan, you should consider all the pros and cons of unsecured personal loans vs secured personal loans and then make a decision.
Make sure that your credit score is up to par if you’re going to apply for an unsecured personal loan of any kind. Taking the time to tighten up your score could have a huge impact on what happens with your interest rate. Always take the time to explore your options and see if you can obtain the funds some other way first.
If you do choose to obtain a personal loan, make sure that it works with your budget and your time frame.