THE ULTIMATE GUIDE ABOUT LOANS

1. THE ULTIMATE GUIDE ABOUT LOANS A loan is a lump sum of money that you borrow with the expectation of paying it back either all at once or over time, usually with interest. Secured loans are loans that rely on an asset as collateral for the loan. In the event of loan default, the lender can take possession of the asset and use it to cover the loan. Interest rates for secured loans may be lower than those for unsecured loans. Figure 1Loans The asset may need to be appraised to confirm its value before you can borrow a secured loan. The lender may only allow you to borrow up to the value of the asset. A title loan is an example of a secured loan. Unsecured loans don’t require an asset for collateral. These loans may be more difficult to get and have higher interest rates. Unsecured loans rely solely on your credit history and your income to qualify you for the loan. If you default on an unsecured loan, the lender has to exhaust collection options including debt collectors and a lawsuit to recover the loan. Examples of secured loans Loan against property Home equity line of credit Car loan Examples of unsecured loans Credit cards Personal loans Student loans

2. Is a Secured Loan Better than an Unsecured Loan? Apart from being easier to obtain, the contract on a secured loan is usually more favorable for a borrower than an unsecured loan. Often times, the repayment periods are a lot longer, the interest rates are lesser, and borrowing limits are higher. All these factors imply that opting for a secured loan is more beneficial for a borrower. Figure 2Which one is better Secured Loan or unsecured Loan Ever lenders prefer secured loans over unsecured loans as they are less risker to dispense. Since borrowers have to provide an asset as collateral to obtain a secured loan, there is a degree of certitude in the mind of the lender. The lender is assured to get back the money loaned out, and even if he doesn’t the asset can be used to recover the loss of non-payment. So as we have seen, loans are expensive. Sometimes we need to consider the opportunity cost of decisions we make. Although we can afford the monthly payment for a vehicle loan, house loan or a personal loan. We need to look at how much interest on the loan will cost us. Having a better understanding of loans and interest rates will help you make large purchase decisions in the future. Cre Cred dit Help India it Help India is a Credit Advisory company which will help you on how to increase cibil score instantly instantly and ensure your creditworthiness. how to increase cibil score