How To Guide For: Understanding The Difference Between Secured Debt And Unsecured Debt
Secured debt is is a loan that is guaranteed by collateral, the lender can offer better rates than an unsecured debt. Collateral is an asset used to secure a loan; it is something that the lender can take if the borrower defaults. The most typical assets used as collateral are homes and cars. Installment loans are typically issued with secured debt. Unsecured debt is an obligation or debt that does not have specific property (like your house or car) serving as collateral for payment of the debt. If you fail to make payment on an unsecured debt, the creditor cannot take any of your property without first suing you and getting a court judgment. Revolving credit is often the types of loans issued with unsecured debt. Your payment amount can vary, or revolve, based on your account balance and interest rate. Both types of debt will show up on your credit report. To get more information on secured debt and unsecured debt and the difference between the two -- click the pictures below to read the articles.