Secured Loans
A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. The debt is thus secured against the collateral — in the event that the borrower defaults, the creditor takes possession of the asset used as collateral and may sell it to regain some or all of the amount originally lent to the borrower, for example, foreclosure of a home. From the creditor's perspective this is a category of debt in which a lender has been granted a portion of the bundle of rights to specified property. If the sale of the collateral does not raise enough money to pay off the debt, the creditor can often obtain a deficiency judgment against the borrower for the remaining amount. The opposite of secured debt/loan is unsecured debt, which is not connected to any specific piece of property and instead the creditor may only satisfy the debt against the borrower rather than the … [Read More...]
Unsecured Loans
Unsecured loans do not have asset for collateral. These loans may be more difficult to get and have higher rates of interest. Unsecured loans rely solely on your credit history as well as your income to qualify you for the loan. If you happen to default on an unsecured loan, the lender has to exhaust collection options including debt collectors and lawsuit to recover the loan. The simplest unsecured loan is a personal loan from a friend or family member, with an I.O.U. as signature of agreement to pay back the loan. This type of unsecured loan should be well considered whether one is the lender or borrower. Large amounts of money that remain unpaid can be very detrimental to relationships with family members or friends. Either the lender or borrower may be dissatisfied with the rate at which the loan is being paid, and there is little recourse but small claims court if the loan remains unpaid or unsatisfied. An unsecured loan thus means that the lender relies on your promise to … [Read More...]
How to Get a Loan with Bad Credit
Getting a loan with bad credit score may seem like an impossible task. In fact, you may think that you only have one option: a co-signer. However, there are actually several different ways you can get a personal loan, even if you have a bad credit history. To understand your options, it helps to go behind the desk, so to speak, and see what it is that a loan officer or underwriter is looking for when you submit your loan application. Even though your credit is a huge part of whether or not you will get approved for a loan, it’s not the only factor that lenders consider. If your history of bad credit is a thing of the past and at present you are maintaining good credit, then it is very likely that the bank (or credit union) will approve your loan. Maintaining a good credit after an unhealthy financial past shows the banks that you have learned from your mistakes and that currently you are adept at managing your finances. Things can get problematic if your bad credit is a present … [Read More...]