4 Key Things to Know About Secured vs Unsecured Personal Loans
Written byHailey Ang
Updated on: December 21, 2022
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When it comes to personal loans in Singapore, there are two main types: secured and unsecured.
Knowing the differences between these two loan options is key to making sure you choose the best one for your needs.
Here’s a look at some of the key things to know about secured vs unsecured personal loans:
1. Collateral Requirements: The biggest difference between these two loan types is that secured loans require collateral – usually in the form of property or assets – while unsecured loans do not. This helps reduce a lender’s risk and makes it easier for you to qualify for a loan if you have a less-than-perfect credit score.
2. Interest Rates: Because unsecured loans are riskier for lenders, they typically come with higher interest rates than secure loans – so opting for a secured loan could save you money over time by reducing the overall cost of borrowing.
3. Loan Limits: Unsecured loans tend to have lower limits than their secured counterparts, meaning that if you need to borrow a large amount of money then a secured option might be your best bet.
4. Credit Score Requirements: Finally, secured and unsecured personal loans have different credit score requirements; typically, an unsecured loan requires only a fair or average score, while a secured loan may require good or excellent credit scores in order to be approved.
By understanding these key differences between secured and unsecured personal loans in Singapore, you can make an informed decision about which type is right for your financial situation.
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