The basic difference between secured loan and unsecured loan

Short term payday loans

A secured loan is that kind of loan that is protected by any kind of valuable good or some form of assets. The normal items that can be used as collateral includes any purchased house or car or any other good of high value. The good or the asset is kept by the finance company or the bank till the loan is repaid by the borrower. This type of loan is mostly used getting loan for a large amount of money. As the amount of money is large so the borrower is required to provide a guarantee that will act as an assurance till the loan amount is repaid back. The rate of interest applied for secured loans is quite low as compared to the other forms of unsecured loans.

Unsecured loans are the loans that do not require any protection to be kept with the lender. It is expected that the borrower will be able to repay the loan. Before providing an unsecured loan the eligibility as well as the creditworthiness of the borrower is checked and then if the criteria is met the borrower is provided with the loan.

Payday loan is basically a loan that is given for a short period of time. This type of loan is provided with a high rate of interest. A payday loan does not require any credit check of the borrower. It also does not require any processing fee for getting the loan approved. The loan requires a very little approval time and once approved the loan amount is immediately disbursed into the account of the borrower. Short term payday loans are very helpful for those who are facing crisis in the business. For getting a good amount of money in an immediate basis for recovering from any unpleasant situation same day payday loan are very helpful.