A secured loan would be a loan that requires up front clear capitol. Examples would be your home, your property, or your vehicles. Secured loans could be used for debt considerations, remodeling of your house, or making additions to your house. People used these type loans basically for large purchases that their budget will not allow. By spreading payments over time this gives the borrower the ability to purchase without causing critical expenses to your budget. An unsecured loan would be using credit cards, a unsecured personal loan as some examples. No collateral will be required for these type loans. However they will carry in most circumstances high interest rates.
These type loans are only made by financial institutions for targeted or selected items. Some examples would be a loan for a new vehicle, a house, motorcycle, or a boat. These loans are made for a specified item and none of the loan proceeds can be used for any other reason.
Unsecured Personal Loans
This type loan is approved solely on the borrower's ability to pay. No up front collateral is needed. However this type loan will carry a much higher interest rate because there is nothing declared of valve for the institution to recover if the customer defaults on the loan.
The major advantage of using credit cards for a large purchase is that it is quick and simple. The major disadvantage of credit cards is you will be paying extremely high interest rates on the money borrowed. Credit Cards are best used for short term needs that can be paid back quickly so the borrower will not accumulate higher interest rate charges inflating the credit card balance. Overall you will spend a lot of your income financing a long term debt on credit cards.
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