Debt Consolidation Explained >> Debt FAQs >> What is the difference between a secured and unsecured loan?

What is the difference between a secured and unsecured loan?

A secured loan is a loan that is secured against an asset that you own. Usually this is your home but could also be other real estate, a motor vehicle, or a valuable object that you own. The downside of a secured loan is that the asset itself is at risk if you fail to keep up repayments.

An unsecured loan is not secured against any particular assets you own, so they will be at less risk than with a secured loan.

Interest rates are usually much higher on an unsecured loan compared to a secured loan due to the security that a secured loan provides to the lender.


Debt Consolidation Explained contains general information only. We strongly advise you to seek qualified professional advice before taking any action.

 

 

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