As a personal loan consultant, you will be associated with loan and interested to know latest difference between unsecured loan and secured loan. Both unsecured loan and secured loan is part of credit which is given by a financial company. To learn more about its difference, please concentrate on following basis of differences.
Unsecured loan is that loan which is given without any security. Suppose, you need $10,000, you show you income and employment verification and other reference of your financial position and bank allows to you $ 10,000. This will be unsecured loan.
Secured loan is that loan which is given on the basis of security of your any asset. Either you can give the registry of your building or you can give any other fixed asset. If you will not pay, bank or financial company has right to sell and recover their bad debt.
2. Amount of Loan
Often low amount of loan can be obtained through unsecured loan, but if you want to start a company and you need very high amount of secured loan for its construction work, you have to give the security of it.
3. Productive and Unproductive
Unsecured loan is very low amount which is needed in short time and bank accepts your proposal after seeing your past credit history and ranking.
Secured loan is totally productive and there is high risk of loss of money, so bank will not accept your proposal without getting any security.
4. Interest Rate
You have to pay high interest on your unsecured loan because high risk of bad debt.
You have to pay less interest on secured loan than interest on unsecured loan because low risk of bad debt.
5. Legal Claim
A person who provides unsecured loan will become unsecured creditor, he can sue to court for getting his money but his can not take the possession of any property for getting his loan.
A person who provides secured loan will become secured creditor, he can also sue to court for getting his loan and also sells the property which is under his possession for receiving his debt.