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What is a Loan and How are They Different?

 

When taking out a loan it is important to know that they are not all the same and there are various and different kinds of loans that have different uses. There are plenty of loans and each one of these loans have different terms and conditions. The different types and kinds of loans each have their own merits and risks. The conditions of a secured loan is more stricter and is more complicated than those that are unsecured. A main difference between these two is how debt collection efforts are being handled in the event that you are default on your loan payments. Your options of debt repayment may be different and be managed quite differently in a secured loan than a unsecured loan.

 

Most Bonsai Finance purchases such as that of your house and the car that you wanted to buy is called secure loans in which they are called secure loans because the debts acquired under this kind of loan is secured against collateral. A mortgage loan is also considered as a secured loan since in a mortgage loan, the one that has been loaned from has the right to repossess the house if you default your payments.  Defaulting on a mortgage loan is very bad and can lead to a foreclosure where in the lender will take the rights to the home that you previously own and may sell the home to others in order to satisfy the unpaid payments.

 

Loans for a car are also secured installment loans for bad credit. The lender has the ability to repossess the car that you wanted to have if you cannot pay the payments and might sell it to another person to satisfy the debt that you have, if the amount of the car that has been sold still does not cover the amount that you have asked for then you are still liable to pay for the car that you have loaned for.

 

Unsecured loans do not have collateral used against the loan. The lender does not have the right to get the properties of the person that loaned but just extend the debt collection method that they have. The lender does not have the right to seize the property of the person that loaned and cannot sell nor give it out to anyone else in order to satisfy the loan that person has taken. Check out this website at http://finance.wikia.com/wiki/Mortgage_Jargon to know more about loans.