Most of us have trouble understanding the different types of loans available and which kind of loan is right for our individual circumstances and needs. Fortunately, it’s less difficult to understand the ins and outs of loans and loan terminology than you might think.
There are two broad categories of loans. Every kind of loan can be boiled down to one of these two types, making it a bit easier to understand exactly what type of loan you’re getting and how it really works.
Secured loans have some kind of tangible property involved that the financial institution can claim if you can’t pay your loan off, called the collateral. While secured loans mean risking some of your own property, they generally have lower interest rates. Car loans and mortgages are two of the best known kinds of secured loans, with the collateral being the car or home you’re buying with the loan.
Unsecured loans have no tangible property associated with them, and represent a much higher risk to financial institutions. As a result, these types of loans tend to have much higher interest rates, to offset the risk to the lender. Credit card debt is a common type of unsecured loan, as is a money loan or payday loan.
Look no further than the financial experts at Midland Mortgage Corp. Their staff will help you to get the best purchase money loans to handle your financial needs.
Call to schedule an appointment at 803.765.1680 and toll–free at 800.854.9484