When it comes to borrowing money, there are several options you can look for to start shopping around. Nonetheless, it is advisable to learn what unsecured loans and secured loans are before you apply for a loan. The Internet has made us believe that applying for a loan is very simple, buy whether online or offline, taking out a loan could be a painful process of declined applications if your credit history is not good, but here are some facts about secured and unsecured loans that you need to know when you need a loan fast.
Determine Your Chances to Succeed
As noted above, there are two types of loans; secured and unsecured, but there are several credit score stages at each of them that place you at either having good credit, poor credit, bad credit or no credit story at all. Before searching for the best loan deals, get your credit reports from one of the three credit reporting agencies (EquiFax, TransUnion or Experian.) Your actual credit history is what determines your chances to get a loan application approved without further requirements than your creditworthiness.
Are Unsecured Loans for You?
Getting an unsecured loan is the hardest option that anyone can try, because loan lenders will only approve your applications when your credit history is good. Unsecured loans are only issued upon checking your creditworthiness. To apply for this type of loan you need to fill out a form with personal, financial and employment information, besides personal references and provide the lender with a copy of documents that are confronted with the information that you provided. Based on this information, the lender will approve or decline your application.
Secured Loans, Your Second Option
If your credit is good but your application was declined, you can try to apply for a secured loan. Secured loans, however, are mostly meant to allow people with negative credit history to apply for a loan by providing assets that serve as collateral instead of good credit references. Except for this requirement and the higher interest rates that secured loans charge, all the processes to apply for this type of loans is similar to that of unsecured loans. Even though, payday loans are unsecured loans that do not require paperwork nor credit check, but your paycheck as collateral and the payment of even higher interest rates.
Whenever you can, shop around for unsecured loans that offer better interest rates and never put at risk your most precious assets used as collateral.