What Makes Secured Line of Credit Better Than Unsecured LOC
Are you thinking of borrowing some money?
At this point, you need to decide whether to opt for an unsecured LOC, such as credit card advances, or a secured LOC, like searching for title loans near me.
Sometimes, people get confused about which option will suit them.
So, it’s time to learn the significant difference between both options.
However, it would be best to know both terms before you can look into their points of difference.
What is a Secured Loan?
As the name tells you all, it’s a loan when you get a loan amount when you offer some sort of security to the lender.
In simple words, you can borrow money against collateral, and it could be your home or your car.
A car title loan is a less risky secured loan than that of a mortgage as in case of nonpayment, and you don’t lose a roof on your top since the loss of the car isn’t that big.
You can always finance a used car with better terms.
However, losing your home and asking the lender to fund it again is difficult to cross.
What is an Unsecured Loan?
It’s a type of loan where you get a loan amount without putting your home or car at risk.
It might sound like a better option, but this facility comes with some limitations.
The benefits of having an unsecured loan are that the lender doesn’t come for your property or car when you don’t pay him off.
However, you should be fully aware that an unsecured loan like a payday loan or credit card advance has a borrowing limit, and you can’t expect to loan a significant amount through it.
Why is a Secured Line of Credit Better Than an Unsecured Line of Credit?
When you start searching for title loans nearby, you know that lenders are ready to pay you more than 40 percent of your car’s market value.
For example, when your car’s market value is $20,000, you can borrow more than $8000 from your lender.
This limit is indeed significant, and you can meet your emergency needs with it. However, you can’t borrow that much money from an unsecured LOC.
For example, if you have a credit card, you have a limit of $1000 per month. You can’t borrow beyond that limit.
The overall borrowing cost is another thing that makes people look for the best title loans nearby.
A plus point of secured LOC is that you put your car at risk of dropping down your lender’s default link. And it’s how you can expect a low interest rate on a loan.
Conversely, the cost of an unsecured loan is higher, as the lender always charges a high interest rate, increasing the overall cost of borrowing.
When it comes to approval and speed of loan application, you would be happy to know that you can get a secured loan like title loans near me quite fast these days, you don’t have to wait for weeks.
As soon as you fulfill all loan requirements like a lien-free clear title, insurance, and income proof, you can easily have cash into your account within 24 hours.
That means payday isn’t your only best option, and you can borrow more with title loans.
