You need to get a personal loan and the one thing you are confused about is whether to get a secured or unsecured loan. Don't worry you are not the only one; a lot of people are in the same boat as you are. Just ask your lender, he probably has a ready made introduction course (secured and unsecured 101) for every person applying for a personal loan.
A secured loan is simple. When you ask for a secured loan you basically offer them collateral to secure that you will pay back the loan. This is usually done for people with bad credit history. This could be quite tricky, if you cannot pay your loan back and you offered your house as collateral you loose your house and no one likes being homeless. Therefore always be sure that you are able to pay the loan back.
There are however benefits to this type of loan. You may get a lower interest rate and also your loan gets stretched over a longer period of time. This makes it easier as the installments will be a lot lower. As mentioned before the failure to repay the loan would mean that you loose the asset you and your lender agreed upon. The amount that cannot be paid off would then be made up by either selling your house, car etc.
Secured loans are also more available to people who might have slipped up once or twice in their credit history. It's similar to when you fill your car up with petrol and you realize you forgot your wallet at home, you want to leave then to go fetch it but the petrol station manager just met you so how will he know that you will return and pay him what you owe? He wont, therefore you leave something valuable. This makes you more anxious to get home and return a.s.a.p to pay so you feel more at ease.
Furthermore, when taking out a personal loan the lender rarely disputes the reason for your personal loan, hence the term "personal". This allows you more flexibility in your intentions for the loan and with a secured loan these intentions are very rarely turned down.
A unsecured loan also has its benefits. An unsecured loan is basically the complete opposite of a secured loan. This means that an unsecured loan is not secured with an asset of yours. This will mean that if you cannot pay the loan back you will be stuck with bad debt, but you will be able to keep all your assets. The process of applying for an unsecured loan is a lot easier than a secured loan. This is because the lender only needs to check your credit history and if it is up to standard you have your loan. With a secured loan you need to go through a process of evaluation of your assets etc.
Before you walk into a bank you need to analyze your credit history and your finances. You need to decide for yourself first before asking for any recommendations, what would be a better option for you.
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