Here are some questions to ask yourself before you choose between secured and unsecured loans.
What is your priority?
It is time to revisit your list. Indicate how much you would like to spend on a certain goal. Rank your needs and wants based on its importance and urgency. Making a choice can help you achieve a specific goal.
If you plan to accomplish a certain financial goal within a week or within 2 years, set a realistic target date, indicate its cost and purpose. If it is an emergency expense such as car repair or home renovation right after a natural disaster, then it can be on your top list. Banks and other lenders usually approve the loan fast if it is secured by collateral. But, at NSW Mortgage Corp, secured and unsecured loans are usually processed within a few hours and released within a day or after a few days.
On the other hand mid-term goals such as college education or investments that you seek to accomplish within 5 years or less are priorities that you can list on the second rank. Long-term goals take the last rank.
Secured loan such as second mortgage and refinancing can be spent both on short-term and long-term goals. Even mid-term goals can be financed with this type of loan. However, if it is extremely urgent, unsecured loans such as personal loans are often used.
Do I have a spending plan?
What are your wants and needs? After you establish your financial priorities, you may consider listing expenses to help you get started with your spending plan. Record your specific project, where you will spend the money on, as well the needs and wants of your family, if applicable.
How much will the credit cost?
Before you make any credit decision, it will be very helpful to carefully weigh all your loan options. Remember that when you sign up for a secured or unsecured loan, you indicate that you agree to everything written in there. So, before you make a borrowing decision, try to compare the terms of the loan products offered by various lenders.
At the very least, here are loan terms that you will want to compare to others:
- Credit limit
- Finance charge
- Grace period until interest or late fee is charged
- Interest rate/ APR
- Late fees
- Length of the loan
- Maximum loan amount you are allowed to borrow
- Over the limit fees
- Required minimum monthly payment
- Total cost of the loan
Choose between secured and unsecured loans wisely. Don’t be carried away by loans with hidden fees and do not yield to the temptation of getting a huge amount of loan that you cannot repay. Instead, make a borrowing plan. Think about how much you must borrow to meet a financial need. Remember that taking out secured or unsecured loan can be a very strategic financial move, if you know how to use your money wisely.
Contact NSW Mortgage Corp to know which secured or unsecured loan is right for you.