Unsecured Or Secured Loan:When thinking about borrowing money, you need to carefully consider all options. Current rates,
the amount you need to borrow, terms of repayment and your current obligations can all have a significant impact on your loan choice.
Choosing Your Loan
find that there are many loan options, too - each designed for a specific borrowing purpose. You'll want to be certain that the loan you're applying for is
the one that best matches your borrowing needs.
When shopping for a loan, you'll probably hear the terms Unsecured and Secured. What are they?
What do they mean? Which is best for you? Read on for the details.
Unsecured LoansWhen you apply for a loan that is unsecured, the lender believes that you can repay the loan on the basis of your financial
resources. Granting the loan is not based upon "collateral" - meaning that you do not have to give the lender rights in a specific asset, like your home or
car, as security in case you become unable to repay.
Unsecured loans are usually offered at higher rates than secured loans and have lower
Examples of Unsecured Loans:
- Personal Loans
- Personal Lines of Credit
- Student Loans
- Some Home Improvement Loans
Secured LoansA secured loan is usually needed when borrowing larger amounts to fund major purchases. A secured loan is contingent upon the borrower
providing "collateral" to ensure repayment. For example, a popular secured loan is a home equity loan. To obtain a home equity loan, you must give the
lender rights in your home as collateral; a mortgage is written against it. Likewise, with an auto loan, you are using the auto as the collateral for the
loan. In the case of default, the lender can take possession of the vehicle.
Secured loans usually offer lower rates, higher borrowing limits and
longer repayment terms than unsecured loans.
As the term implies, a secured loan means you are providing "security" that your loan will be repaid
according to the agreed terms and conditions. It's important to remember, if you are unable to repay a secured loan, the lender has recourse to the
collateral you have pledged and may be able to sell it to pay off the loan.
Examples of Secured Loans:
A Dollar Bank Representative will help you determine what type of loan you need for your borrowing situation.
- Home Equity Loan
- Home Equity Line of Credit
- Auto Loan (New and Used)
- Boat Loan
- Recreational Vehicle Loan
- Home Improvement Loan
To try our loan calculators,
The information presented in this publication is general in nature; it is not our intention to provide specific
advice to individuals or a comprehensive discussion of the subject matter. We suggest that you consult with your
financial or tax advisor, accountant or attorney to obtain specific advice or comprehensive information.