DIFFERENCES OF COLLATERAL AND NON-COLLATERAL LOANS

When you or your start-up business needs a loan, it is important to be as informed as possible about the different options available. In this article, we will explain the differences between collateral loans and non-collateral loans. It is essential that you understand these differences so that you can choose the best option for your particular situation.

Collateral Loan. It is a type of loan in which the borrower pledges collateral in exchange for the loan. Collateral may be personal property, real estate, or other assets that are used to secure repayment of debt. The term “collateral” can refer to any asset that has value and is used as security for debt repayment

Non-collateral Loan. It is a type of loan that does not require any collateral. Such loans are also known as personal loans or signature loans, even though they are not secured by the borrower’s assets. Instead, these types of loans rely on the borrower’s credit score to determine whether he/she qualifies for the loan and at what interest rate. One of the most famous non-collateral loans nowadays due to its fastest turnaround time and lowest interest rate is the pag ibig loan. Simply visit pag ibig website or office, viola you will have the loan proceed credited to your pag ibig loyal card within 1 to 3 banking days.

Conclusion. A collateral loan requires the borrower to pledge some sort of asset as collateral for the loan. This type of loan is ideal if you need money fast and have valuable assets that you can use as security in order to get a loan quickly. If you don't have assets that can be used as collateral, then a non-collateral loan may be your best option.

Is your business is struggling with working capital shortages? We are here to help. Apply for working capital financing here. 

We hope this article has been helpful, and we recommend learning more about these two types of loans by visiting our website. Interested to apply for a loan? Click here. 

loan