Secured Personal Loan
A personal loan is one in which you use the money for random personal things and don’t have to be too specific about what it is such as a car or a home. However, when thinking of a personal loan most people think of it like a credit card which is unsecured debt. But not all personal loans are like that and some are secured debt which is something to at least be knowledgeable about.
When looking a secured personal loan you can talk with the bank about what they want to hold as collateral if you default on the loan as this insures to them they will get their money. Some common things the bank might hold for collateral are investments, and money market accounts that would be able to pay the debt if you were to default on the loan. When taking out this kind of loan just like any other loan you want to ensure you can pay the payment and that you won’t default on it but in this case you know exactly what you would lose if you do default.
The advantages of a secured personal loan is that you still get the money you need for whatever expense you are trying to cover but don’t have the money for. A secured personal loan can help someone build up credit for larger purchases down the road, and the interest rate is much lower than it is on an unsecured loan. The interest rate is huge and something that causes many to take out a secured personal loan over an unsecured personal loan because with a lower interest rate the bank is going to be making less profit off the money you borrowed which saves you money when paying the loan back. Overall it is important to understand the terms of any loan even a secured personal loan.
