How Secured Loans Are Different From Unsecured Loans

Dealing with money lenders can often be a very daunting process. These seem to us to be these big organisations that control such a vast amount of money. But credit industries are designed to help you so there is no need to be afraid! This article will attempt to provide you with some insight into the process of money lending in Singapore, and hopefully, it will put your mind at ease. Before we get into some of the best places to go for money lending in the area, let’s discuss some of the finer points on borrowing money.

What is a Loan?

Firstly, let’s deal with the very basics. A loan is any amount of money that you borrow from a bank, a close friend or indeed anyone. The loan works on either a verbal or written contract, with the agreement that you will give this amount back some time in the future. While that sounds pretty straightforward, there are in fact a few differences in the types of loans you can get. Mainly this difference comes from whether or not the person or bank you have borrowed the money from asks you to use one of your assets as a safety net against the loan. Depending on this happening or not is the difference between an unsecured and secured loan.

Unsecured Loans

Firstly, let’s look at the more basic of the two, the unsecured loan.

An unsecured loan is one in which there is no asset from the person who is borrowing the money is negotiated as part of the deal. This is a very common loan for students and individual taking out smaller loans as it lessens the impact of a default.

Usually, these types of loan repayments are smaller, so it lessens the burden on the lender if a default on the loan occurs. This type of loan ensures that the money lender is not able to take any goods or property in order to pay for the loan in the event of you not being able to complete the rest of your payments.

Secured Loans

Now let’s discuss the more complex of the two; Secured Loans

These type of loans are made with the knowledge that some form of possession or property belonging to the person taking out the loan is being used as collateral. The types of things used in these instances can vary but generally, they relate to the loan. For example, loans for cars are backed by the car being bought, just as mortgage loans are being backed by the house itself. This is an important agreement with the lender as if you default on the loan payments, it means that you accept that the lender can take the collateral as a repayment.

But be warned that this is not always the end of the problem, as even though the lender can take property, there is a chance that there will still be money outstanding on the loan. A repossession works by selling off the property at the highest price. But if the profit is not enough the cover the amount left on the loan, the onus is then on the person who has taken out the loan to make up the difference.

The Consequences of Debt

Foreclosures or repossessions on loans can be damaging, as it may be put into your credit report, weakening your chance of securing a future loan. Often lenders will record their transactions with you and then report your loan history to the credit bureau. Reports of loan payment failures and excessively late payments will then show on your credit history. As you can see its always better to go to money lenders offering unsecured loans for smaller amounts of money. But that poses the question of where?

Where to Go?

Money lending services in Singapore can be confusing at the start, especially to foreign visitors. But a great place to look at for natives and visitors alike is Credit Hub Capital, which offers a large variety of loans for all scenarios

What Do They Offer?

There are four main loan types offered by Credit Hub Capital:

1) Instant Personal Loan

For when credit bills or family expenses start to build up. A non-disclosed loan, no reason has to be given for using this money lending service, ensuring client privacy.

2) Urgent Payday Loan

This is the most basic type of money lending available to customers. For when bills or other expenses unexpectedly arrive, and you need an instant injection of money to deal with it. This loan is availed off quite often, due to how easy it is to rack up small amounts of debt before you get your weekly or monthly salary. Credit Hub Central guarantees payment within the same day as your application.

3) Quick Foreigner Loan

Ideal for newcomers in the country looking for a quick loan needed to pay general expenses like rent, apartment bills or other necessities. As long as you are an international visitor or hold and S-Pass and are currently living in Singapore, then you can apply. Make sure you have the necessary documentation to prove so though!

4) SME Business Loan

This loan is perfect for small and local businesses and for people looking for some capital for a start-up business. Often times business people use this type of loan if they are thinking about expanding their stock or looking at building extensions or refurbishments.

As you can see there are plenty of loan types available, just make sure you choose the right one!

Conclusions

Taking out loans can be a very tricky business even for natives but especially for newer visitors, but as long as you follow this information, and make sure you go to the right money lender, then your concerns over defaults or repossessions shouldn’t worry you. Places like Credit Hub Capital are designed the easy the financial burden on individuals, families and students alike. But wherever you go, just make sure it’s right for you. While it’s always best to be absolutely sure when deciding that you need to take out a loan, with friendly money lenders, it can be as easy as taking out money from the ATM!