Choosing the Right Loan for You

First of all when you have a secured loan you have collateral for that loan.  The loan can be for a car, home, or other loan as long as you are placing something up as collateral.  Most often when talking about secured loans you are looking at car loans or home loans.  In these cases the collateral is going to be the car or home.  It is something the bank can repossess if you fall behind on your payments.  The reason that a secured loan is also nice is the lower interest rate.  You will find with the collateral for the bank they are willing to give a lower interest rate as you do not pose a higher risk. 

For unsecured loans you are going to pose a higher risk because there is nothing to back up the loan.  This means if you don’t pay the loan the chances of the bank getting their money back is less, which offers a higher risk.  Therefore the bank doesn’t offer as good a loan for unsecured loans.  When you are trying to find the best loan for you these two options should be taken into account.