Comparing Personal Loans vs. Secured Loans
More Information about Personal Loans
PersonalLoan.bz has other pages to assist you with learning more about personal loan lending:
A Quick Description of Personal Loan Lending
Tips for Shopping for Personal Loans
What can You Pay for with a Personal Loan?
Understand the Details of Personal Loan Lending
Features and Benefits of Personal Loans
Credit Cards vs. Personal Loans – How They Differ
Compare Loans – How a Personal Loan Differs from a Secured Loan
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When you take out a secured loan, you have to back your promise to repay with an item of value, for example your home or car. If you do not pay your secured loan back on time and in full, the lender can take possession of the property you pledged as security. That pledged property is also known as collateral.
A personal loan, on the other hand, does not require any collateral. All the lender has to guarantee your personal loan is your signature on the loan contract. This means the lender faces a greater level of risk with a personal loan. If you do not repay your loan, the lender has nothing of value to make up for the loss. Because of that increased risk, the interest rates on personal loans are often higher than on most secured loans.
It might seem that not paying back a personal loan is less serious than not repaying a secured loan where you could lose your house or car, but you do have something very valuable at stake with a personal loan. Failure to repay your personal loan can do serious damage to your credit rating.
Bad credit can affect your ability to borrow money in the future, to qualify for a credit card, to be considered for a job and to be able to rent a home or apartment. You’ve worked hard to build your good credit, so take these simple steps to protect it:
- Only borrow what you need and can afford to repay
- Pay on time every time
- Pay your full amount due every month
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