Frequently Asked Loans Questions - Answered
What is the difference between a secured loan and an unsecured loan?
Put simply a secured loan is a loan where collateral has to be provided as security. The security that is most often used is you home or rather the equity that has been built up in your home. By using this as security lenders reduce the risk of borrowing and are therefore able to offer loan to people with sever or less than perfect credit history. Obviously the downside of securing a loan against your home is that you may loose your house if you cannot keep up repayment on you loan for whatever reason.
Unsecured loans on the other hand are not secured against any asset which means for most high street banks anything less that a perfect credit history may result in your loan application being declined. As there is more risk involved with an unsecured loan lenders tend not to lend as much with most having a maximum borrowing limit of around 25K to 30K.
