You may be wondering what the difference between secured and unsecured loans is. Why is a loan categorized into these two types? Which one of these is suitable for your financial needs? Here are the key differences between the two:
Secured Loan
The type of loan in which any kind of your financial asset is kept as collateral is known as a secured loan. Mortgages are the most common types of secured loans. The sole purpose of collateral is to ensure that the lender can recover his money from the collateral if the applicant fails to make timely payments.
Unsecured Loan
Contrary to the collateral nature of secured loans, an unsecured loan does not require any collateral on the loan. Student loans and personal loans fall into the category of unsecured loans. The major factors assessed during the approval process of unsecured loans are credit score and your history with previous loans.
Which One is Better?
Although secured loans come with low interest rates and higher borrowing limits, still you cannot label them preferable over unsecured loans. Both of these types have advantages. It depends upon your personal needs and financial goals, which one suits you the best. Apply for your next loan on Quick Cash Loans to get the best loan packages.
