Category: Personal Finance
Published: Wednesday, 13 January 2016 19:48
Written by M
If you want to apply for a loan, you could choose either a secured loan or unsecured loan. A secured loan allows the borrower to put up an asset as collateral in exchange for money from a financial institution - such as registration loans. The collateral becomes security for the debt that the borrower owes to the creditor or lender. The collateral is usually a vehicle or real estate property. If the borrower does not repay the loan, the creditor can confiscate the vehicle or real estate property as a way to satisfy the borrower’s debt after selling the collateral. From a creditor’s viewpoint, this is a debt category of which the lender has received permission to assert rights to the person’s asset. An unsecured debt is the opposite. It is not linked to any assets, but rather, the creditor satisfies the borrower’s debt by going after the person’s credit, but first putting the account in collection. In that case, the person’s credit score will be adversely affected.
Read more: What to Know About Secured and Unsecured Loans