Unsecured Vs Secured Loans

Ever wondered what the differences are between an unsecured loan and a secured loan?

Well, let us take a short moment to break down the main advantages and disadvantages of both so you can make the right decision about which type of funding is best for you and your business.

Collateral

• An unsecured loan does not need collateral secured against it.

• A secured loan will require you to put up collateral – a house, car, machinery for instance.

• With an unsecured loan, even if you default, you do not risk losing your personal possessions.

• However, if you default on a secured loan the lender has the right to reposes your collateral.

Rates

• An unsecured loan means you do not have to put down collateral to secure it.

• As you have not put down collateral against your unsecured loan APR rates are higher than a secured loan.

• A secured loan, because you are required to put collateral against it, will have lower APR rates, whereas an unsecured loan will be offered at higher rates.

Terms

• Usually, unsecured loans are given over a shorter period of time. This can see you out of fix for just a few months or years (although rates are higher).

• A secured loan usually has a longer term – this in itself sees lower monthly repayments - however, it does mean you have the loan for a lot longer.

Ease of Application

• Unsecured loans will be more difficult to obtain than secured loans, however, there are more and more lenders entering the market place (way beyond the bank) year on year so there’s a wider choice. At Cashflow Bridge we have high acceptance rates for unsecured loans for our clients because we, as we are 100% independent we have access to the whole of the market, meaning we approach the right lenders in light of each business’s trading background.

• A secured loan can be easily obtained.

• Whilst with an unsecured loan you do not need to secure collateral against the funding most lenders will want a guarantee of income and a good credit rating, proving your business is stable.

• Even those with a bad credit rating can usually obtain a secured loan (it may just be the APR is slightly higher).

Don’t worry if you’re still unsure about which type of loan will best suit your needs. As independent brokers, with access to the whole of the market, it’s our job to find you the right funding, with the right lender, at the right rate. Give us a ring, and in a short phone call we’ll be able to suggest, along with providing indicative, no obligation quotations, the right loan for you.

For more information on Cashflow Bridge’s funding services, such as unsecured and secured loans, start up finance, stock funding, consolidation, short and long term loans, including advice and an immediate, no obligation indicative offer, contact the team today on
07917 871832 or email kevin.weaver@cashflowbridge.co.uk