Secured and Unsecured Loans: Check Out the Differences
A secured loan requires collateral, which is an asset that the borrower pledges to the lender as security for the loan. This collateral could be real estate, vehicles, or other valuable assets. If the borrower defaults on the loan, the lender can seize the collateral to recover their losses. An unsecured loan does not require collateral. Instead, the lender extends credit based on the borrower's creditworthiness, income, and other financial factors. Because there's no collateral involved, unsecured loans typically have higher interest rates compared to secured loans, as they pose a higher risk to the lender. Many first-time home buyers in Melbourne eagerly explore options like the First Home Buyers Grant Melbourne offers to kickstart their journey into homeownership.