Secured loan and unsecured loan

People apply for a loan for different matters, sometimes when they find themselves in the financial crisis, they do to banks and money lending companies to borrow money and resolve their current problems, and they also take a loan for a house or car purchasing. Some people borrow money from banks because they want to increase their businesses further or want to start a new business. There are many other reasons for which people apply for loans such as weddings, student loans, or loan for emergencies when they do not have enough saving to fight with urgent needs. Mostly people go to banks for the loan but there are also money lending companies who give a loan to people. Loans have been further divided into many categories such as personal loan, business loan, short term loan, long term loan, secured loan or unsecured loan.

Secured loan

A secured loan the type of loan in which people submit the papers of their valuable things as guarantee things which they already own like cars, properties, plots or such things. The borrower would not allow to sell that property or thing further and to prevent that lenders keep the legal papers related to that collateral in his control. He would have the right to sell the collateral in case the borrower defaults the loan.   The lender can then sell the asset for the amount due on the loan. A good example is a mortgage which is a type of secured loan in which the borrower’s home is used as collateral. Should the borrower default on repaying the mortgage loan, the lender can foreclose on the house and resell it for the amount due on the mortgage. The interest rate will be fixed and will remain same as long as the loan goes.

Unsecured loan

The unsecured loan is the type of loan which does not require any type of guarantee collateral and paperwork. There is only one paper included in the whole process of loan application and that has your vow that you will return the loan with your signature. Keep in mind that unsecured loan put the lender’s money at a great risk and to overcome that and to get more profit the lender keeps the interest rate much high than a secure loan. Payday loans are the best example of unsecured loans. A payday loan is the type of loan which people get when they are in a dire need of money for short term. The amount of the loan can be as shorter as 100 dollars. Different money lending companies have different policies for example Loan 2 Payday gives loan from 100 pounds to 5000 pounds. This is not a private lender, it is a broker which has many investors and lenders and that is why this website had a way to flexible rules and regulations than any other money lending company.

A payday loan is very easy to get. In few minutes you can submit the application online and a few minutes later you will get the reply whether or not you are getting the loan. In the case of positive response, the money will be transferred to the borrowers account within 24 hours.