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secured loan , tangible assets like home or cars are put down as pledges and while this is safe for the lender, the borrower may not really want to go for such loans if there are other options available. Yet, secured loans are usually the only option when large amounts of loan are required. Thus both secured and unsecured loans have advantages and disadvantages and it depends on the need of the borrower as to which form of borrowing the borrower chooses. "> When one falls in need of money and thinks of borrowing it, the usual first step is to find out the various categories of borrowing available and which would be best suited to the person in need. In general, there are two kinds of loans, namely the secured loan and the unsecured loan. For the lender, secured form is safer and hence it is more easy and common to obtain a secured loan. What exactly is a secured loan? A borrowed amount in which something is laid down as a security against the amount is called secured loans. The most common form of this is the homeowner loan. In this form, the house is a security against the amount given and in case the borrower fails to return the amount within the stipulated time, the lender has full right to take away the home that was mortgaged. The lender may then auction the house to obtain the amount that was lent out. This kind of amount lent out usually comes at a lower rate of interest as the lender is at an advantage of being able to obtain the money back through another source if the amount was not paid. On the other hand, most borrowers do not prefer to take such a loan because there is the added risk of losing the property that was mortgaged. Advantages of taking a secured loan For the ones having a poor credit history, it is indeed difficult to borrow. In such cases, the secured loan is a savior as the lender is usually willing to overlook the bad credit history if the borrower can provide a big enough security in collateral. The amount that can be borrowed is also much higher in comparison to an unsecured loan. Any lender would be cautious to give out a huge amount when there is no way of obtaining the amount back in case the borrower is unable to pay back the amount. But when there is a collateral present, the lender agrees to pay as large an amount required because it is always possible to get back the amount from the security provided. With the lenders preferring secured loans, there will be more attractive terms and conditions. The rates will also be lower in comparison to secured ones and a large amount can be borrowed. Even if the borrower is unable to pay within stipulated time, the penalty charges are also less. Secured loans in comparison to unsecured loans For lower amounts, unsecured loans are more preferable. In secured loan , tangible assets like home or cars are put down as pledges and while this is safe for the lender, the borrower may not really want to go for such loans if there are other options available. Yet, secured loans are usually the only option when large amounts of loan are required. Thus both secured and unsecured loans have advantages and disadvantages and it depends on the need of the borrower as to which form of borrowing the borrower chooses.
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