Personal Loans - Secured Or Unsecured?

By Mark Bonders for mortgage-and-loan-info.com

Our need for money takes various shapes and forms. Sometimes, we need immediate cash just to tide us over a week or two. But for those times when we need just a little bit more than that, then personal loans are the answer. A personal loan is generally defined as small-dollar borrowing for non-business purposes like when you want to fix your home, use it for tuition, debt consolidation, or even to finance your vacation! Want to know how much personal loan you can borrow, try an online loan payment calculator and see.

Loans for personal use can either be secured or unsecured. A secured personal loan requires the borrower to put up something as collateral. Depending on the amount you wish to borrow, this can be anything from jewelry to your car or even your home. Because you are giving 'security' to the borrower for the loan, secured personal loan amounts are generally higher than what you can get from unsecured loans. The interest rates applied are also more 'lender friendly'.

An unsecured personal loan does not require any collateral or security from the borrower. However, since the lender is going to rely solely on the borrower's ability to pay the personal loan, the interest rates applied on the loan tend to be higher. Further, the amount you can borrow may be limited. Despite these, unsecured loans are great personal loan alternatives for those who do not have any collateral to offer. For instance, if you are a tenant (and as such, do not have any claim to your current abode), then you can still get a personal loan!

Now, do not be one of those who wrongfully think that it's ok not to settle an unsecured loan. If you don't pay up your loan, the lender CAN sue you.