Knowing the Difference Between Secured and Unsecured Loans
Posted on July 31, 2007 in the category
When it comes to loans, there are two basic types: secured loans and unsecured loans. Unsecured loans are sometime called personal loans. Secured loans are also referred to as home equity loans, home equity lines of credit or second mortgages.
The big difference in these two types of loans is with a secured loan the lender will put a lien on you home allowing them to foreclose on you home if for any reason you would stop making your payments.
Unsecured loans are cheap loans compared to a personal loan. The interest rate is less because there is less risk. If you do not make your payments, the lender can sell your home to get their money back. With a personal loan all they have is your signature on a piece of paper, making it much more difficult for them to recover their money. For this reason, personal loans will have a higher interest rate.
Tags: personal loans, secured loans, cheap loans, signature loans
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