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.
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.
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!