When you borrow money either from someone or any financial institution it is considered a loan. Generally speaking, loans can be classified into two types. These are Secured and Unsecured loans.
While you may have several options as to where you can borrow money from, sometimes your signature will be enough as a promise for repayment. Other times you may be required to put up some of your assets before you will be granted the amount you are trying to borrow. This is actually what differentiates these types of loans.
What Is a Secured Loan?
As a part of the terms included in a secured loan, a borrower agrees that the lending facility or the bank to which he or she has acquired the loan may repossess the assets in question if in case the borrower fails to pay back the loan on time.
Furthermore, this asset or set of assets is considered as “collateral” for the loaned amount, these assets can be as follows:
- A car
- A House
- A piece of land
If in case you default on your applied Secured loan:
- You will not only lose your asset but you may also pay more than your originally stipulated loan.
- More so, if the asset that you have put up as collateral is not enough to cover what you have borrowed, you will also be liable for paying the remaining amount.
The interest rate on a secured is considered lower since borrowers keep their assets as collateral. Lenders also have lower risks in this type of loan. Secured loans also allow borrowers to borrow bigger amounts of money and grant them longer repayment terms. Furthermore, borrowers have a better chance of approval since their loan application is backed by their assets.
What Is an Unsecured Loan
An unsecured loan, on the other hand, does not require an asset for approval. Typically, as requirements for the loan, borrowers must have a good credit score and a stable income to be approved for their applied loan.
Vidalia Lending has been known for its services since 2008. We have reached over thousands of Filipinos and provided them with their financial needs. To avail of our featured loans, all you have to do is visit our website, fill out our online application form, wait for our call within 48 hours, and get a hold of your borrowed cash in 2-3 days.
If in case you default on your applied Unsecured loan:
- Your interest rate will pile up and you will end up paying for an even bigger amount rather than what you have borrowed.
- It will also affect one’s creditworthiness and applying for unsecured loans again may result in a rejected loan application.
While the interest rate for an unsecured loan may be higher than a secured loan, in an unsecured loan you will not have to tie your applied loan down with your valuable asset. This type of loan allows borrowers to borrow smaller amounts of money and it has also a flexible loan term as well as loan maturity.
In Conclusion
The bottom line is, whether opting for a Secured or Unsecured Loan, is the borrower’s sole responsibility to commit to timely payment. As for a Secured loan, it may be the best option for bigger and longer purchases such as a home or a car. An unsecured loan, on the other hand, may be the best option for immediate financial needs.
Vidalia Lending offers a variety of loans. You can choose from our Personal loan, Salary loan, Business loan, and Small Business loan. All interest rates are lower than the usual rates offered by other loan providers. Be able to borrow without any collateral and you won’t need a co-borrower to be credited. For inquiries, you are free to visit our Help page
