Why Is Unsecured Loan Interest Rate Higher Than Secured Loan?

Unsecured Loan

When it comes to determining the kind of loans a borrower would derive, two certain things will fall into place: secured loans, loans backed by assets; unsecured loans, loans provided without any collateral.

Secured Loans

Secured loans are normally furnished by lending institutions such as banks or credit unions. To get an approval, you need to make ready an asset as collateral for the loan. It could be your house, car, or any title deed required by your lender. That said, if you fail to pay off your loan as agreed to terms and conditions, your lender holds the power to repossess your property by selling it to pay off the loan. What makes it worse, if the cost of your property cannot clear the debt, you will be responsible to pay additionally.

Unsecured Loans

With unsecured loans, you, the borrower, are not required to place your own asset in your lender’s hands. Although the lender doesn’t have the power to seize your property immediately if you are unable to repay the loan, there are ways that can be conducted legally to make you settle your debt. Because lenders are likely to take more risks on unsecured loans, this type of loans is usually presented with smaller amounts and higher interest rates or charges than the secured class. On the bright side, you are only expected to have a good credit history and solid income to get an approval.

If you think of taking out an unsecured personal loan from Cashwagon, simply go to our website (https://cashwagon.com.kh/), and fill up an application. Second, wait for approval via SMS. Third, once you have approval, you can pick up the loan amount you applied at the nearest payment agent partnered with us. All of this should take you no longer than thirty minutes! Alternatively, you can call us at 016 962 512 and a representative will help you apply for an online loan. All you have to do is answer a few questions!

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