Understanding secured and unsecured personal loans

A personal loan could help you reach your goal sooner with fast access to funds, but what loan should you apply for ─ secured or unsecured?

Here are the differences between them to help you determine which one could be suitable for your needs.

Secured personal loans

A secured personal loan requires you to provide an asset as collateral in case you’re unable to meet the agreed loan repayments in the future.

With an asset such as a car used as security, the interest rates for secured loans tend to be lower because there is less risk to the lender.

Unsecured personal loans

Unsecured personal loans do not require assets as collateral and the loan amount is based on your ability to repay. They often suit borrowers who have a strong credit history but don’t own any assets.

If you default on an unsecured loan, the lender lacks any assets to sell to cover the amount owing so interest rates are typically higher.

How can I use a personal loan?

Whether secured or unsecured, personal loans provide fast access to funds with predictable fixed repayments. There are a variety of uses for a personal loan, including:

• Travel

• A new car

• Debt consolidation

• Home renovations

• Covering medical costs

• Bridging cash flow gaps

• Weddings and celebrations

How do I get a personal loan?

Liberty offers both secured and unsecured personal loans with personalised rates. Accessing funds is also quick and seamless due to the simple online application process.

If you’re looking for cash flow quickly to make your dreams a reality, explore your options here to find a free-thinking personal loan that works for you.