LOS ANGELES – December 28, 2021 – (Newswire.com)
iQuanti: Installment loans can quickly get you the funds you need to cover your expenses. With these loans, you can borrow a lump sum of money and repay it in fixed monthly installments. Many lenders have lenient credit score requirements, so you may qualify for an installment loan with poor or fair credit. Let’s take a deeper look at the differences between secured and unsecured installment loans so that you can determine which option is right for your needs.
What is a secured installment loan?
A secured installment loan is a loan that requires the borrower to provide collateral as security for repayment. Since providing collateral makes the loan less risky for the lender, these loans can sometimes be easier to obtain.
An auto loan is an example of a secured installment loan. When you buy a car “on credit”, the car itself is the collateral. If you don’t make your payments, the lender can repossess your car. A mortgage loan is another type of secured installment loan that uses your home as collateral.
What is an unsecured installment loan?
Unsecured installment loans are loans that do not require collateral. These loans are considered to be less risky for the borrower because there is no risk of losing an asset if they cannot repay the loan. But it does mean that they may be riskier for the lender so these loans may come with higher interest rates.
There are many lenders who offer unsecured loans to borrowers with poor or fair credit. Some of them will consider factors in addition to your credit score when deciding whether to approve you, such as your income and work history.
Unlike secured loans, you will not lose any valuable item you own if you default on an unsecured loan. But keep in mind that missed or late payments will be reported to the credit bureaus, which can lower your credit score and hurt your chances of being approved for credit in the future. Whichever loan option you choose, making regular payments on time can have a positive impact on your credit score.
Which loan is right for you?
When deciding whether to get a secured or unsecured installment loan, consider your options and individual needs. For example, if you own a car and are ready to put it as collateral, a secured loan might be more suitable. Borrowers without this type of collateral, or those who are unwilling to take the risk, may consider applying for an unsecured loan. Compare loan options and factors like interest and fees to decide what type of installment loan is right for you.
Note: The information provided in this article is provided for informational purposes only. Consult your financial advisor about your financial situation.
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Secured or unsecured installment loans