When looking to obtain any type of loan, you will always be faced with dilemmas and options. Whichever loan you decide to obtain, it is generally the options that surround each one where it can get confusing. However, the first thing to decide is whether or not your loan will be guaranteed. Almost all the loans available in the market today are one or the other, so which is the best?
Although unsecured loans pose a higher risk to lenders, they are more widely available and come in a number of different forms, such as a credit card or personal loans. Also, they generally don’t require any collateral or assets and might have more flexibility in terms of payment options.
But despite all these benefits, even the highest loan amounts are lower than with a secured loan. Rigorous credit checks are conducted to show that you are creditworthy and able to repay the loan in full. Also, if you are low-income or have had credit problems in the past, it can make it much more difficult to obtain an unsecured loan.
If you are successful, you will need to ensure that your budget can handle the repayments. Many unsecured loans have a higher interest rate that could cost you more in the long run. If you miss a payment or cannot repay the full amount, it will affect your credit rating and make it more difficult to borrow again in the future.
A secured loan is the type of loan that is protected by a valuable asset or collateral. It is a lower risk for lenders who can offer larger loan amounts because, as the name suggests, it will provide “security”, be it a house or a car, to help borrow the money.
Although credit checks are generally still used to ensure a credit history, the process focuses more on the security it can provide. The lender views the high-value item being offered against the loan as a guarantee that you will repay the loan in full and therefore retain ownership of the loan.
However, it does mean that the lender has the right to take possession of the item if the loan is not repaid in full, including fees and charges. This will affect your credit score in the same way as if you defaulted on an unsecured loan.
A secured loan for your car
One of the easiest and fastest ways to get a bigger sum of money is to get a secured car loan. Often referred to as a logbook loan, the process involves obtaining a loan secured on your car as valuable collateral against it.
There are several reliable lenders available to you and some have already helped thousands of clients withdraw cash from their cars and make the process enjoyable and simple. Some companies do NOT offer formal credit checks, so as long as you own your car and are free of financing, there is no reason they won’t help you.
It is important that you do your research before committing to a loan company. Many offer hidden fees and charge penalties for repaying the loan early. This can come as an unpleasant surprise for many people once they have already been tied into a contract.