The difference between an unsecured loan and a secured loan is simply the fact that with an unsecured loan, you do not put up any security against the loan, such as property, to protect the Lender should you default on the loan and not pay it back.
Most secured loans are secured against the equity in property, or cars or other large value items. This means that if you do not repay the loan, the Lender can force the sale of the item held as security. I stress 'can force the sale' as it is not always necessary to do this as other agreements can be met.
A law was passed recently which gives the Lender of an Unsecured loan power to seek ways of recovering any money lost as a result of a borrower defaulting on the loan. If the borrower owns a property, the Lender is now quite within his rights to place a 'charge' on the property, in the same way as the mortgage Lender does. What this means is that when the property is sold at any time in the future, once the mortgage Lender is paid, any remaining money is paid to the Lender trying to recover his money.
In a nutshell, this means that if you are a homeowner, there is now little difference in a secured loan or unsecured loan because if you default on the unsecured loan, the Lender puts a charge on your property turning the unsecured loan into a secured one.
An unsecured loan is favourable if you do not have any equity in your property or do not own property. If a secured loan offers a better interest rate than an unsecured one, and you have equity in your home and are not planning on never repaying the loan, then I would recommend that you opt for the secured loan and save on the interest rate.
Most secured loans are secured against the equity in property, or cars or other large value items. This means that if you do not repay the loan, the Lender can force the sale of the item held as security. I stress 'can force the sale' as it is not always necessary to do this as other agreements can be met.
A law was passed recently which gives the Lender of an Unsecured loan power to seek ways of recovering any money lost as a result of a borrower defaulting on the loan. If the borrower owns a property, the Lender is now quite within his rights to place a 'charge' on the property, in the same way as the mortgage Lender does. What this means is that when the property is sold at any time in the future, once the mortgage Lender is paid, any remaining money is paid to the Lender trying to recover his money.
In a nutshell, this means that if you are a homeowner, there is now little difference in a secured loan or unsecured loan because if you default on the unsecured loan, the Lender puts a charge on your property turning the unsecured loan into a secured one.
An unsecured loan is favourable if you do not have any equity in your property or do not own property. If a secured loan offers a better interest rate than an unsecured one, and you have equity in your home and are not planning on never repaying the loan, then I would recommend that you opt for the secured loan and save on the interest rate.
