If
you need a loan from a moneylender, then you should know about the differences
between a secured loan and an unsecured one. The amount that you can borrow
will depend on your income, type of loan, credit situation, and whether it is
an unsecured loan or not. If you want to know more, then you can read this
article.
UNSECURED LOANS
What is an unsecured loan?
Unsecured
loans are loans wherein you do not
need to pledge any asset to serve as collateral for your loan. Instead,
moneylenders will take into consideration your credit score, credit history,
current credit situation, and income. Your income is especially important for
moneylenders as this will determine the amount that you can borrow. To protect
borrowers from incurring a financial burden, the Singaporean Government has set
a maximum as to how much clients can borrow, which will depend on their income.
If you want to know more, you can visit the website of Singapore’s Ministry of
Law.
What does it mean to have an
unsecured loan?
Compared
to secured loans, unsecured loans can have higher interest rates as unsecured
loans present a far greater risk to lenders. Also, because of the risk,
successfully availing for an unsecured loan can be more difficult compared to
availing for a secured loan.
Like
in any loan, make sure that you can repay the loan on time as moneylenders can
charge penalty fees for late repayments.
SECURED LOANS
What is a secured loan?
A
secured loan is a type of loan wherein you, as the borrower, will pledge an
asset, typically a car, lot, or your house, to serve as collateral for your
loan. The asset that you will pledge serves as a way to make a secured loan. In
case you default on the payment, the lender can seize the asset that you
pledged. Once the lender has taken possession of the asset, the lender can sell
the property to recover money.
What does it mean to have a secured
loan?
Unlike
unsecured loans, with a secured loan, you can avail for a loan of any amount.
Also, with secured loans, moneylenders can offer you lower interest rates
because of the collateral. However, as stated, foreclosures and repossessions
can happen if you default on the payment.
Before
you make a secured loan, you should be sure that you can repay the amount lent
to you by the creditor. Moneylenders can charge you with late penalty fees if
you cannot repay your loan on time.
MAKING A LOAN WITH THE RIGHT
MONEYLENDER
With
the risks involved in both secured loans and unsecured loans, it can be more
disadvantageous for you if you availed it from an unreliable moneylender. Thus,
if you are looking for a loan, you should always choose a trusted and highly-recommended
moneylender. With Fortune Credit, you can get a loan package with
flexible repayment terms. Visit their website if you want to know more!
