What is an Unsecured Loan?

The words secured and unsecured often appear as adjectives before a number of loans and some are not entirely familiar with what they refer. When I first ventured into the territory of applying for a loan, I would often come across terms that were somewhat unfamiliar to me as well. Now, most of my previous experience with loans came in the form of credit cards
and they were relatively easy to apply for. However, if you are applying for a sizable loan from the lending institution you may be asked to put up collateral for the loan. That is, you need to put something of value up in the unforeseen instance where you are not able to pay back the loan. (Unsecured loans – aka personal loans – due not require any collateral to be put up prior to the approval of the loan) This does not generally refer to auto loans and loans for home mortgages the car and the house are essentially the collateral, but it you are looking for a significant amount of money for, say bill consolidation, the lender will probably not approve a personal loan beyond a certain threshold amount. As such, if you are looking to make a loan and due not have sufficient collateral you will need to know what the “threshold” limit for an unsecured loan the bank offers is.

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