Personal Loans vs. Collateral Loans: Important Things to Know
A large percentage of Americans are struggling to regain control of their finances in the wake of the pandemic. This includes repaying owed rent, rebuilding savings accounts, and purchasing necessities. In these times, many people are turning to loans in order to secure the money they need to make it until their next paycheck. However, before running to the bank for an unsecured personal loan, collateral loans should be considered for their many benefits.
What is an unsecured personal loan?
There are generally two types of loans: secured and unsecured. An unsecured loan is a loan in which you aren’t required to put up collateral as a form of repayment. However, since there’s no guaranteed repayment for the lender, unsecured loans tend to come with tighter restrictions and more hoops to jump through in order to approve the loan. Personal loans often require up to a week to process before you’re approved while the lender reviews your credit history, bank statements, and other related documents. There’s a chance you may not be approved for the loan at all, and if you are, your interest rates are often high to make up for the lack of security for the lender. Unsecured loans also have a negative effect on your credit score while you’re in the process of repaying them.
What is a collateral loan?
The second form of personal loan is a secured loan, also known as a collateral loan. A secured loan requires you to put up some form of collateral for the lender to repossess in the instance that you default on your loan. Luxury assets such as fine jewelry, watches, handbags, and art are popular forms of collateral as they allow you to obtain a higher loan value without any risk of harming your credit score. Since you’re offering collateral with an equal or higher value than your loan amount, there is often no credit check or the possibility of affecting your credit score. You can also get your needed cash on the same day without the lengthy approval process of an unsecured personal loan.
Which loan is right for me?
Both loan types have their advantages, but which is right for you will depend on your current financial situation. If you want a loan that doesn’t require you to declare your debts or go through a credit check, collateral loans are the best option. They’re also the more ideal option for those who need cash quickly, even on the same day, or if you don’t want to risk a negative effect on your credit score. If you have luxury goods that you don’t mind parting with temporarily, collateral loans have many benefits that make them a popular choice among Southern California residents.
If you need cash fast and have valuable items that you’re willing to temporarily part with, a collateral loan from Watch & Wares is an excellent solution that offers many practical benefits. From low-interest rates to generous loan terms to no effect on your credit score, collateral loans are the option that many Orange County residents prefer for sourcing cash fast. At Watch & Wares, we offer some of the most competitive appraisal pricing in the area, and our insurance rates are always state-regulated. We have a generous four-month loan term with a 10-day grace period, and we’re always happy to renew your loan in exchange for the full repayment of interest owed. To find out more about our collateral loan process or to receive an appraisal on your luxury item, contact us at (714) 633-2030 or fill out our online contact form today. We would be happy to schedule an appraisal appointment for your earliest convenience.
