Is an Installment Loan Secured or Unsecured?
If you’re shopping for loans, you may have come across the terms “secured loans” and “unsecured loans.” Is an Installment Loan secured or unsecured and does it make a difference to a borrower?
In this article, we’ll provide the answers you’ll need to know before applying for your next loan.
What is a secured vs. unsecured loan?
The main difference between a secured loan and an unsecured loan is collateral. Collateral is something of value to the borrower that increases their chances of paying back a lender. If a borrower doesn’t fully repay their loan, the lender takes possession of the item that was used for collateral.
A secured loan requires you to provide collateral when borrowing money. Common types of collateral you might use to get a personal or business loan include your:
- Home or property
- Commercial equipment
- Bank account
The risk of losing an asset can be motivation enough to repay your loan on time and in full, which is why lenders consider secured loans less risky.
By contrast, an unsecured loan doesn’t require you to provide anything of value as a guarantee to pay back what you owe. Not everyone owns (or wants to risk) an asset valuable enough to use as collateral, so an unsecured loan can be a good option when you need money and can meet the lender’s eligibility requirements.
What is an Installment Loan?
An Installment Loan is a type of financing that lets you borrow a set amount of money up front and pay it back over time through scheduled payments called installments. Unlike other kinds of loans that may require you to repay the full amount and fees all at once, repayment terms for Installment Loans could be a few weeks, a few months, or even a few years.
Are Installment Loans secured or unsecured?
Installment Loans can be either secured or unsecured. A lender will use factors like your credit score and your overall financial situation to decide if they’ll offer you an Installment Loan that is secured or unsecured.
Secured vs. Unsecured Installment Loans: Which is better?
Neither kind of Installment Loan is better than the other. Each type has pros and cons to be aware of when deciding which may be right for you.
Secured Installment Loan pros
- Larger loan amounts.
- Lower interest rates.
- Availability. Many lenders offer secured loans.
- Ability to build credit if you make your payments on time.
Secured Installment Loan cons
- Risky. You could lose your collateral if you fail to repay the loan.
- Fewer choices in terms of loan products.
- Loan amounts are limited by the value of the collateral.
Unsecured Installment Loan pros
- No risk of losing an asset.
- Simple application process.
- More options. There are many kinds of unsecured loans you can apply for.
- Lower interest rates compared to many credit cards.
Unsecured Installment Loan cons
- Smaller loan amounts.
- Higher interest, so you may pay more overall.
Benefits of Installment Loans
There are some advantages to applying for Installment Loans, including:
• Easy application process. Many lenders have online applications that you can fill out any time of day on your computer or mobile device.
• Quick approval decision. You’ll typically know within minutes if your loan application has been approved.
• Fast access to funds. Once approved, you’ll be able to access your money quickly – sometimes as soon as the same day you apply.
• No restrictions on how to use your money. You can use an Installment Loan for emergencies, such as car repairs or medical bills, or you can use it to pay for planned expenses like large purchases or vacations.
• Good credit isn’t necessary. There are many lenders with lenient credit requirements offering unsecured Installment Loan options you may be able to qualify for even with bad credit. If you have something you can use as collateral, this may help a lender see you as a more favorable borrower for a secured loan.
The convenience, speed, and flexibility of Installment Loans can make them a good option for borrowers who need money quickly for various reasons.
How to get an Installment Loan
To apply for an Installment Loan, follow these simple steps:
1. Select a lender
Do some research to find reputable lenders offering Installment Loans, which might also be called signature loans. Read a lender’s Google reviews and look for them on Trustpilot to see the ratings and reviews customers have left regarding their experiences.
Advance America is an established lender offering loan services for over 25 years. We have more than 200,000 customer reviews on Google and a 4.8-star Trustpilot rating. Let us help you with your loan needs!
2. Gather the necessary documents
You’ll need to provide personal information on your loan application. Be sure to have your government-issued ID, pay stubs or other proof of income, and bank account information to refer to.
3. Fill out an application
Visit the lender’s website or physical location to complete an application. Before submitting your application, check for mistakes or missing information to avoid delays in approval and funding.
4. Wait for the approval decision
You should know quickly if you’ve been approved for your loan. Lenders like Advance America will let you know within minutes.
5. Receive your money
Once you’re approved, you’ll be able to use your loan money quickly. Depending on the lender’s funding policies, you may receive your money the same day or on the morning of the next business day.
6. Begin making payments
Be sure to make your payments on time. Set reminders if you need to! If your financial situation ever changes while you’re still making payments, contact your lender to see if a loan refinance is an option.
Is an Installment Loan right for me?
One of the important things to consider about an Installment Loan is you’ll need to budget for regular payments over a period of time. You’ll want to give careful thought to what your future financial situation may look like during the lifetime of the loan.
Advance America offers unsecured Installment Loans
Advance America is proud to offer unsecured financing options to borrowers from all credit backgrounds. Our Installment Loans can help you pay for expenses you weren’t expecting, or help you cover major purchases you’ve been needing for a while.
Visit us to get your loan application started today.