What’s the difference between unsecured loan and secured loan?

There two type of loans a person can take. One type is an unsecured loan and the other type is a secured loan. The difference between unsecured loan and secured loan is. An unsecured loan does not require borrowers to offer collateral. A secured loan require borrowers to offer collateral.

Collateral is when you pledged something as a security for repayment of a loan. If you were to default the load then you forfeited that something.

For example.

If you were to have $10,000 on a brokerage account. You can put the $10,000 as collateral and borrow $2,000 against it. The brokerage will happily lend you the $2000 dollars.

Why? because in the event that you default, they can take their $2,000 money back.

Secured loan

A secured loan require borrowers to offer collateral. Some of the things that can be use as collateral are:

• Bonds
• Stocks
• Investments on a brokerage account
• Cash in saving account
• Cash in Money account
• Cash in a certificate of deposit
• Future paycheck
• Home
• Car
• Boat
• Jewelry
• Precious metals
• Antiques
• Fine art
• Collectibles
• Insurance policy

Unsecured loan

Unsecured loan does not require the borrowers to offer collateral. Some of the things that are consider unsecured are:

• Student loans
• Credit cards
• Medical debt
• Personal loans
• Wedding loans
• Vacation loans

Now you know that An unsecured loan does not require borrowers to offer collateral. And a secured loan require borrowers to offer collateral.

That’s it.

Now, start and adjust as you go.