If you’re looking to take out a loan to help you with your finances, whether that be a short term loan from a payday lender like LoanPig, or a loan from a bank like a mortgage, you are going to need to make a decision between an unsecured loan and a secured loan. But what is the difference?
Watch our video for a quick summary or read on for the full info
A Secured Loan – A secured loan is one that is connected to something that you own, which is used as collateral if you cannot make up your repayments, such as a car or a home. With a secured loan, the lender can take possession of the collateral if you do not meet the set out repayments. An example of a secured loan is a mortgage and a car loan.
An Unsecured Loan – An unsecured loan on the other hand is not protected by collateral and therefore the lender cannot automatically take your property if you fail to make the repayments. An example of an unsecured loan is a credit card or personal loan.
Which Is Right For You?
Now you know the difference, the key is to working out which one is truly right for you. Generally, a secured loan offers less risk to the lender as it is protected by your assets, but that doesn’t mean that they are easy to get. If you have a poor credit history for example, you are highly unlikely to be able to secure a loan from a financial institution such as a bank, even though it is still protected. A secured loan generally tends to have lower interest rates. However, a secured loan is generally only for large amounts of money, and the amount that you are offered and the interest rate will depend on your personal finances and whether you are a homeowner or not.
Unsecured loans on the other hand are widely available to a large proportion of people, they offer flexibility to choose how long you have to repay them, with most borrowers making fixed repayments, and you don’t have to worry about losing your possessions if you miss a repayment. Here at LoanPig, our short term loans are unsecured. The only disadvantage to an unsecured loan is the fact that interest rates are generally higher than that of a secured loan, but you are far more likely to be accepted for one.
Choose LoanPig For Your Unsecured Loan
Here at LoanPig, we provide unsecured short term loans to our customers who are facing a financial emergency and need cash quickly to get them through until payday. We provide a range of options when it comes to how much you are looking to borrow and how long for, in order to make your borrowing hassle free. Upon application we will carry out a number of checks in order to keep in line with our responsible lending practices, and will aim to match the most appropriate loan with your application. Use our online calculator to apply for an unsecured short term loan from LoanPig today.