During the process of buying a home in Austin Texas, or elsewhere in the United States, you may hear the terms “secured” or “unsecured” loan but is there a difference?
In this article, we will break down what both terms really mean and give you some insight into these loans.
Secured Vs. Unsecured Loans
Secured versus unsecured loan: If you're Googling this phrase, odds are you're immersed in the process of looking for a loan, and need some clarification on the difference between these two types. So, here's the deal: A secured loan means you put up something of value as a promise you’ll pay the loan back. An unsecured loan requires no such collateral. Now let's dive into the details.
When to get an unsecured loan
An unsecured loan, also known as a personal loan, is enforced by a contract signed by the borrower and the lender of the unsecured funds. Loans such as credit cards, lines of credit, and student loans are common types of unsecured loans.
Since there’s no collateral, getting an unsecured loan is dependent on your credit score and income. Plus, you'll pay a higher interest rate, because your lender is taking on more risk—if you don't pay back the loan, not much can be done to recoup those expenses.
Hire an Austin Texas Realtor
To get started with buying or selling a home in Austin TX contact the Kent Redding Group today by calling us at (512) 306-1001 or click here to connect with us online.