When acquiring a title loan, there are two types that an inquirer may obtain. There are both secure and unsecure loans. Knowing the difference between secure and unsecure loans is quite important, as each have very distinct differences. The biggest difference is that a secure loan requires collateral.
There are many valuable assets a person could use as collateral, and many different types of loans that require some form of collateral. Title loans require a car title be uses as collateral, so a title loan is secure.
If you would like to know more about secure and unsecure loans, then keep reading to learn more.
What is an Unsecure Loan?
An unsecure loan is “issued and supported only by the borrower’s creditworthiness, rather than by any type of collateral.” So if you acquire any type of loan without the use of collateral, then that loan is considered unsecure.
Unsecure loans can come in many different forms, such as:
- Credit Cards
- Student Loans
- Personal Loans
Since there is no collateral involved with an unsecure loan, lenders must use a different method of approval. To get approved for an unsecure loan, a lender bases eligibility on the borrower’s ability to repay the loan.
There are several factors that lenders look at in order to approve you:
- Your Credit Score/History: To even be considered for an unsecure loan, you will first have to possess good credit. Lenders will check your credit history to see if you’ve successfully payed off other loans in the past. If you have a score of 670 or higher, then you will most likely be approved.
- Your Income: Lenders need to know you can pay back your title loan. Each lender is different when it comes to providing proof of income. Some lenders may require a pay stub, a W-2, or your recent tax return. There are many documents you can use to provide proof of income so ask your lender what they require from you.
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What is a Secure Loan?
A secure loan is a loan backed by collateral. Collateral can be just about any asset, including a home loan, title loan, or even stocks. The idea behind a secure loan is that by offering up assets, such as a vehicle, borrowers can more easily obtain the emergency funds they need.
But your home and car are not the only assets that can be used as collateral.
The following can also be used to apply for a secure loan:
- Bank accounts (checking/saving)
- Other vehicles (trucks, SUVs, motorcycles, boats, etc.)
- Insurance policies (life insurance)
- High-end collectibles and other valuables
With a title loan, a lien is placed on the vehicle title. This gives the lender legal right to take ownership of your vehicle if your loan defaults or you cannot repay the loan. Due to the security of the vehicle, title loans are considered low-risk for the lender.
At MaxCash, we wish to help you in any way that we can. That is we try and guide you through the process of getting a loan. Be it a title loan, business loan, commercial loan, or just refinancing, we are here to help.
Though, we don’t lend money directly, we have agents available who will try and match you with the best lender possible. We have partnerships with reputable lenders across the nation, and can do all of the tedious research work for you.
For any questions about MaxCash, head over to our About Us page. If you want to know more about how we operate, then checkout our FAQ. You can also contact Max Cash directly 7 days a week by email at email@example.com or by phone at (833) 207-9052.