First things up ahead, a secured loan is good and an unsecured loan is even better- however, a loan is a loan whether secured or unsecured, personal or business, small or big- which must be paid as at when agreed or due.
There are times when you need that small financial aid (for small undertakings such as paying gas bills, legal fees, rent, auto repairs, medical bill, etc) or at times a big financial aid (for big undertakings such as setting up a business venture, traveling abroad, launching a project, etc) to serve as a boost before payday (or the big money) arrives; and you pretty well know applying for a loan will ready be of great assistance at such a crucial time, a secured or an unsecured loan might just be what you need to tide you over.
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However, there are mis-conceptions as regards loans in general- be it secured or unsecured. This may partly be due to stories and tales told, read or heard of people who have had to forfeit one possession (asset) or the other in lieu of not being able to payback the loan (debt) owed.
Opportunity for Loan is created and made available to as many would not mind to apply and in due course payback.
WHAT IS A SECURED LOAN?
A loan is said to be secured when the borrower gets to place any valuable asset (so named Collateral) in lieu of the borrowed/loaned amount of money.
Anything of value can be tendered as a collateral when applying for a secured loan. In most cases, real estate property, vehicle/automobile and jeweleries are the usual and often accepted legal tender/ or securities that is pledged against the loan applied for.
The original papers (or documents) attesting to the claim of ownership of such collateral are requested and deposited (left and kept) in the custody of the lender (financial institution or bank).
WHAT IS AN UNSECURED LOAN?
A loan is said to be unsecured when the borrower does not need to place any valuable asset (nor anything) at all as a collateral or guarantee that the loan amount will be repaid as agreed and as at when due if loan applied for is considered and granted by the lender.
An unsecured loan is said to be free of any collateral attachement or requirement.
WHERE LIES THE BEAUTY IN SECURED AND UNSECURED LOANS?
The beauty to a Secured loan lies in the fact that it affords the borrower the opportunity to gain access to a larger sum of money to meet the financial obligation for which the loan was applied and sought for.
This type of loan is meant for serious minded individuals (borrowers) seeing their collateral is at stake in the event there is a defaulting in the loan repayment.
It also helps keep the borrower focused and serves as a prod in ensuring the borrowed funds is well utilized and managed for the said reason and purpose the loan was applied for.
On the other hand, the beauty to an Unsecured loan also lies in the fact that it affords the borrower an opportunity to put a limit or peg the amount applied for.
Unsecured loan is usually applied for in solving immediate needs or financial needs that are not so capital intensive a project or an undertaking.
It helps prevent and cautions the borrower from over subscribing to the loan applied for seeing there is a limit to which money can be loaned before you are requested to deposit or tender any valuable asset as collateral.
Whether you swing low or swing high, there is always a loan tailored and well suited to meet any particular financial need or emergency that may arise at any given time- both Secured and Unsecured loans help take care of these, and that's where the beauty lies.
Both Secured and Unsecured loans are meant to be paid back when applied for and granted.
Trying to outsmart, outwit or circumvent the loan repayment process (Lender getting back the loan borrowed out) is bad to say the least and should not be considered an option. This is a fraudulent act which should be frowned at whenever such a thing happens.
You not only stand the risk of getting prosecuted and charged to court, in addition you jeopardize opportunities for a loan consideration (whether a secured loan or an unsecured loan) in the event you require one in the future.
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