The best personal loan for your needs will depend on several different variables specific to your borrowing profile. It’s important to understand the differences between unsecured and secured personal loans before you apply, as you should always look to lock in the option which will deliver the most suitable product for you. Some of the key considerations include:
Do I have an asset to use as security?
Secured personal loans, as the name suggests, require borrowers to attach an asset to serve as collateral for the loan. In most cases, this will be your car, but it may also be something like a motorcycle, boat or campervan. If you don’t own any of these or aren’t in a position to use them as security (such as not wanting to attach them as collateral or the fact that they’re too old or in poor condition) you’ll have to take out an unsecured loan.
How much do I need to borrow?
One of the most important differences between secured and unsecured loans is that you can only borrow up to $50,000 with Greater Bank without security but up to $100,000 if you added collateral. If you needed a large amount beyond $50,000 and had an asset which could be used to secure your loan, this is likely to be the best option for your needs. It’s important to know how much you’re able to borrow before applying.
What interest rate do I want?
Unsecured loans automatically come with higher interest rates than secured loans. This is because they lack the safety blanket that collateral provides a lender: if a borrower defaults on the loan, there’s nothing to take ownership of as a means of recouping funds.
What term length do I need for my loan?
Secured personal loans come with available terms ranging from one to seven years in length, while Greater Bank only offers a maximum of five years for their unsecured loans. If you wanted to space out your funds more, a secured loan would allow you to do this.
How fast do I need my loan?
Because of the need to assess the suitability of collateral, unsecured loans are often quicker to process. You’re supplying all the information your lender needs to decide whether you’re a suitable candidate for a loan, making it simpler for them to get back to you with speedy approval.
Of course, you can compare a range of secured and unsecured loans right here with Savvy. With partners around the country, we make comparing different loan offers and making the right decision simpler.