Sunday, November 14, 2010

Unsecured Loans


Contrary to secured loans, unsecured loans do not have collateral to secure the loan amount.  Unsecured loans are considered higher risk because of the borrower defaults on the loan, the lender can only send the account to collections and not be able to seize any property to recoup the losses.

The credit card is the most common example of the unsecured loan.  Unsecured loans are primarily underwritten with credit score, credit history, and income level as criteria to qualify.  Unsecured loans are different from secured loans because the higher risk in an unsecured loan usually means a high interest rate, usually 20% and up.

38 comments:

  1. TV detectives can open locks with them too.

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  2. I DONT WANT TO TAKE A LOAN! I will be paying for it FOREVER!!!

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  3. I never knew that's what a credit card was.

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  4. Wow i didn´t know that about credit cards

    Thanks!

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  5. UNLESS you've got damn good credit ! I always go unsecured if I can. Who wants to put up collateral ??

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  6. jeez, unsecured loans sound like a loss for the company =/

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  7. I usually do see interest rates that high for some store credit cards.

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  8. wow I never realized that about credit cards before, cheers dude

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  9. never spend more than u make and youll be just fine (credit-wise)

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  10. wow that is a really high rate

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  11. Gosh I never knew loans were so complicated! I feel much more informed now I will have to follow it

    Hope you find mine as informative

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  12. I've never had a problem with over-spending on my credit card. I'm terrified of that 20% interest rate (I think it's actually closer to 30% with the low-income, student card that I have)

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  13. Credit Cards bad unless you know how to use them properly.

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  14. same with payday loans, they are mostly unsecured and apprx 20% interest

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  15. I generally don't like loans, too much fine print and details.

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  16. Oh my. And so many people use credit cards too.

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  17. Ya know, just because it's a higher risk doesn't mean you should charge me more interest. That's ridiculous.

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