What Are Personal Loans?
Personal loans are any loan that is awarded directly to an individual, rather than a business, and used to cover personal expenses. Personal loans are especially popular with people who have financial problems, and typically marketed as “bad credit equity loans“.
There are two distinct types of personal loans: secured personal loans and unsecured personal loans. Read on to better understand the differences between these types loans, and to find out which type might work best for you.
Secured Personal Loans
A secured personal loan is a loan in which the borrower leverages collateral or assets to gain access to money. If the loan is not paid back, that collateral then must be forfeited to the lender. Popular forms of collateral that people leverage in this way include cars, stocks and bonds, houses, valuable possessions or real estate.
Secured personal loans are very similar to collateral loans, in fact, they are virtually identical, except that collateral loans can be taken out by businesses, corporations and other non-personal entities, while personal secured loans refer explicitly to loans taken out by individuals.
Bad credit secured loans are especially popular with people who have run into financial trouble in the past, mostly because they can be received without having to run credit checks, allowing individuals with severe financial problems to get a loan without having to pay penalties, put up more money as down payment or pay a higher interest rate because of their previous mistakes.
Lenders are willing to offer secured personal loans for people with bad credit, since the collateral involved provides them with an insurance against the borrower defaulting on the loan. In fact, whenever lenders advertise no credit check loans, they are almost assuredly offering some form of secured personal loan.
- Mortgages – Money is awarded to the borrower and the borrower’s home is used as collateral to secure the loan.
- Home equity lines of credit – Homeowners are awarded a line of credit and their property is used as collateral to secure the loan.
- Auto loans – The borrower is awarded a loan to purchase a car and the new car serves as the secured collateral for the lending company.
- Car title loans – Borrowers take out a loan that’s some percentage of their car’s value, using their vehicle as collateral to secure the loan.
- Secured personal loans are relatively easy to get even for those with bad credit, because lenders often don’t require a credit check.
- Secured personal loans, even when made to individuals with bad credit, can often be provided with lower interest rates, since the collateral decreases chances that the lender will end up receiving nothing as repayment for the loan.
- Secured personal loans can usually be obtained more quickly than unsecured personal loans, since there is far less paperwork involved and the approvals process can be much faster.
- Because collateral is involved in the process, the borrower does risk the chance of losing their possessions if they are not able to make their loan payments.
- As with all loans, recipients of secured personal loans will have to pay back their loans with interest tacked on, and the longer the recipient takes to pay back the loan, the more money they will spend on interest payments.
Unsecured Personal Loans
An unsecured personal loan is a loan awarded to an individual without any collateral offered to the lender. Unsecured personal loans can be more difficult to obtain than secured personal loans since they don’t offer insurance to lenders, and in many cases, they also come with higher interest rates.
It is relatively difficult, if not impossible to obtain an unsecured personal loan with bad credit. Lenders don’t like to offer money to people with poor credit scores (who have proven to be risky borrowers in the past), unless they’re offered something as collateral to ensure that they won’t be left with nothing should the borrower default on their loan.
- Personal loans from a bank – Money is awarded from a bank directly to the borrower to be spent on general expenses. These usually take several weeks to approve and due to the lack of collateral involved, these are often much harder to obtain than secured loans.
- Personal lines of credit – Borrowers are awarded credit, usually in the form of a credit card, which has a limit as well as certain conditions attached to it (like interest rates, minimum payments, payment schedules, etc.).
- Student loans – The lender assigns a loan to the borrower that is then used to cover costs associated with pursuing a college degree, like rent, food, tuition fees and educational supplies. Borrowers can pay their student loans back over the course of many years’, but they cannot escape from paying them back by declaring bankruptcy.
- Borrowers don’t have to risk collateral with unsecured loans, so if they can’t make loan payments, they may not have to give up any possessions (though they could be forced to declare bankruptcy).
- Funds received via unsecured loans can often be spent on whatever the borrower wants, unlike secured loans that come with stipulations about what they’re being used for, like mortgages and car loans.
- Unsecured loans usually require more time and paperwork than secured personal loans, which can be a disadvantage if the borrower is in urgent need of quick money.
- An unsecured loan usually charges much higher interest rates, so more money is lost by borrowers who take out unsecured loans than by those who take out secured loans.
How to Get a Secured Personal Loan with Bad Credit
Fortunately, many lenders are still willing to provide low interest loans, even for individuals with poor credit scores. Some of them even offer secured personal loans with bad credit having no bearing at all on interest rates or loan conditions.
If you have credit problems, but need financial assistance, you should consider applying for a bad credit secured personal loan, shopping around to find one that provides you with the best interest rate, fastest access to cash, and most flexible repayment process.
Make sure to read the fine print so that you fully understand what you are agreeing to before signing any paperwork, however, because failing to fully comprehend your loan terms could cost you tens of thousands of dollars in the long run.
Car Title Loans
Car title loans are a form of secured personal loan using the borrowers car as collateral. A secured car title loan can provide you with a relatively large amount of cash and, oftentimes, within a matter of minutes.
However, using your car as collateral for a loan is only a good idea if you can find a lender who will allow you to retain possession of your vehicle while you are making loan payments, since it’s likely that you need your car to make a living.
The major benefits to receiving this type of loan is that they offer lower interest rates than other similar loans like payday loans or credit card cash advances, and they typically do not require a credit check either. Title loans are issued based on your ability to repay the loan.
About Car Capital Financial
Car Capital Financial provides secured personal loans in the form of car title loans and other vehicle title loans. We have over 15 years of experience providing affordable loans to clients throughout Southern California, and our loans do not require you to leave your vehicle with us.
Our car title loans in San Diego, Los Angeles, Riverside and Orange County have helped countless individuals through difficult financial times, and our loan experts are ready to speak with you about your financial needs right now.
We do not run credit checks, so no matter how bad your credit might be, it will not affect the affordability of your loan, your interest rates or your payment schedule.
To get a safe, affordable and reliable car title loan of your own in as little as 30 minutes, please call us now at (888) 500-9887.