Sorry to sound so dim, but was is the difference between a 'secured' and an 'unsecured' loan. Is a secured loan, a loan taken out in connection with property?
a secured loan is a loan secured against any asset. Therefore if you default on the secured payment the asset can be claimed by the lender.
Quite different to personal loans which are unsecured. Many obtain a personal loan from the bank for the purposes of buying a new car. This is an unsecured loan and the car cannot be seized. HP agreements are secured.
Bank loans, credit cards etc all unsecured so if the unsecured borrowing were used to buy an asset the asset is safe.
It's why generally speaking secured borrowing has a lower interest rate than unsecured because unsecured lenders take more risk.
Hi,Sorry to sound so dim
Posted - 19 March 2009 : 21:11:14
