If you want to refinance credit card debt, make a big purchase, do some home improvements, or even start a small business of your own—then you might be in the market for a personal loan.
The key to taking out a loan is understanding your options. When you know the variety of loans available to you, you can borrow (and repay!) the smart way.
One question you’ll probably have when you’re in the market for a personal loan is whether you want a secured vs. unsecured personal loan. Read on to learn why a Baton Rouge Telco personal loan could be right for you!
Secured Personal Loans
A secured loan is exactly what it sounds like: it’s a loan secured and backed by some form of collateral, such as a personal asset you own.
Backing up a loan with a valuable asset gives the lender peace of mind because if you happen to default on the loan, they can reclaim the collateral, sell it, and recover any money owed. But remember that if the asset does not completely cover the amount owed, you’ll still be on the hook for paying back the balance.
Secured loans are the most common way to borrow large amounts of money, but you don’t always have to use your house or car as collateral. At Baton Rouge Telco, we will accept stocks, bonds, or certificate accounts as collateral as well.
Advantages of Secured Personal Loans
There are many benefits of secured personal loans, especially if you don’t have a great credit history or a big income. The most common reasons are that rates tend to be lower and the borrowing limits higher with secured loans. Usually, the repayment term is longer, giving you more time to pay back the loan.
However, to get a secured personal loan, you have to offer some sort of collateral to the lender, which they can claim should you not pay back your debt. Collateral is typically a car, boat, or even a home. If you default on your payments, the lender has the right to seize that property as a way of getting back the money they loaned you.
Read More: What Can I Use a Personal Loan For?
Unsecured Personal Loans
Unsecured personal loans are loans given to you without any of your assets attached as collateral. With this type of loan, you wouldn’t have to offer up a car or a home in order to be granted the loan. So, in the event that you’re unable to repay the loan, the lender can’t automatically seize your assets as a form of repayment.
Advantages of Unsecured Personal Loans
You might be wondering how you could receive funds if the lender didn’t have something to guarantee repayment? Lenders put their trust into extending unsecured personal loans for a number of reasons, but your credit score and your income would certainly be taken into account.
A strong credit score shows a good repayment history of debts, so if you have it, you’re at an advantage in the application process. But if you don’t, there are other factors that lenders will consider like employment history, savings, and investments. Higher or lower interest rates will be based on this assessment as well.
Secured vs. Unsecured Personal Loans: Which Is Best For You?
The loan type you choose depends entirely upon your financial situation. If you have excellent credit, an unsecured loan is likely the better option for you. There’s no risk involved, you’ll likely get a lower interest rate, and these loans are easy and fast to apply for!
If you don’t have the best credit score or history but own valuable property, you should think about a secured personal loan. If you’re confident in your ability to repay the loan and want a competitive interest rate, this could be the best choice for you.
Read More: Are Personal Loans a Bad Idea?
Get the Money You Need From Baton Rouge Telco
With so many different types of loans, deciding on how to finance your next purchase or project can be overwhelming. At Baton Rouge Telco, we’ll explore the options with you to make sure you choose the best loan for your needs. Apply today to get the money you need!