It's still quite early in the year, and you're still working on your resolutions for this year; one of your goal is to clean up your financial house. Currently you have a multitude of credit cards with a variety of debts and different APR rates. It is time to get a personal loan with the goal to debt consolidate. Right now you are in the process of investigating your options and want to figure out the differences between a secure and unsecured personal loan.
A secure personal loan is one in which collateral is offered in order for a financial institution to loan you money. Theoretically, when a borrower offers security like collateral, they are entitled to some benefits in their loan, such as lower interest rates and more flexible payback terms. The lenders can be more flexible because if the consumer defaults on the loan payment the lenders can take official claim of the collateral that was provided as part of the deal.
Unsecured loans are those arrangements in which a borrower can get money without any type of collateral. Basically your credit history and income is all that matters. These loans are considered to be higher risk business - if a borrower defaults on payments there is no collateral take in place of the money borrowed. Because they are higher risk loans, the interest rates and additional fees the lenders charge are significantly higher than those of secured loans.
If a person has a history of bad credit, it may be challenging to secure either one of those types of loans, because no lender wants to risk any type of default. However, a secured no credit check loan where a consumer has collateral but poor credit may do the trick; since the credit history isn't thoroughly checked.
Of course, with a good credit history, you can choose whichever type of loan you wish. Just remember to check all the terms carefully and thoroughly before signing on the dotted line.
