Your Two Choices When Getting A Loan

Your two choices when getting a​ loan
There are so many choices in​ life,​ it’s sometimes difficult to​ make the​ right one .​
But when it​ comes to​ getting loan,​ there are really only two important choices to​ make .​
The rest are simply details that need to​ be hammered out .​
This article will help you​ understand which of​ the​ two choices is​ the​ right one for you.
An unsecured loan is​ simply a​ loan you​ get based on​ your good name and your credit rating .​
Often the​ interest rates are low the​ higher on​ an​ unsecured loan and on​ a​ secured loan because the​ risk is​ higher to​ the​ lending institution .​
If,​ for some reason,​ you​ are unable to​ pay back the​ loan and the​ lending institution does not get any money back .​
However,​ your good name and your credit rating are potentially ruined.
On the​ other hand,​ a​ secured load is​ a​ low you​ get when you​ put up some assets .​
The advantage of​ a​ secured loan is​ that you​ often get more money at​ a​ lower interest rate for longer repayment period that you​ would with an​ unsecured loan .​
This is​ because you​ have some assets to​ backup your loan .​
The lending institution prefers this kind of​ loan because if​ you​ find yourself unable to​ make payments,​ they can see your assets as​ an​ alternative form of​ payment .​
Because the​ risk to​ them is​ diminished they are able to​ provide you​ with more attractive loans at​ a​ better rate.
You might think of​ a​ mortgage as​ a​ secured loan .​
The bank lends you​ money to​ buy a​ house and they use the​ house as​ a​ way to​ back up the​ loan .​
If you​ do not make your mortgage payments,​ the​ bank can seize your home.
Or you​ can think of​ a​ secured loan as​ a​ pawn shop that lends you​ the​ money you​ want but lets you​ still use the​ goods you​ pawned!
So which one is​ the​ right one for you? It’s a​ tough decision to​ make .​
In most cases,​ a​ secured loan will get you​ a​ better rate,​ so you​ may prefer that.
However,​ perhaps you​ don’t have any assets available,​ or​ you​ don’t want to​ risk the​ seizure of​ certain assets if​ you​ are unable to​ make payments .​
In this case,​ you​ may not mind paying a​ little more for the​ benefit of​ having an​ unsecured loan.
Both unsecured and secured loans are good options to​ have when you​ are doing your financial planning .​
You can use them to​ consolidate your outstanding bills,​ leverage your house investments,​ or​ get the​ things you​ need and want .​
And,​ with the​ choices between unsecured and secured loans,​ you​ have the​ benefit of​ being in​ total control of​ your financial destiny!
Your Two Choices When Getting A Loan Your Two Choices When Getting A Loan Reviewed by Henda Yesti on March 17, 2018 Rating: 5

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