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| *Loan,banking and credit>>>credit line |
Line of credit.? |
What is the difference between a secured and a non-secured line of credit? Please give examples. Thank you. Secured line of credit is backed up with funds (ie cash) or collateral (ie property...car, house, ect)...something the creditor can take if you default on the paymets. Secured lines of credit would include auto loans, mortgages, and a secured credit card is backed up with cash. Unsecured has nothing to back it up...if you default the have to attempt debt collectoins and taking you to court. A primary example of this would be standard credit cards, but can also inculde other loans. SCH answer above pretty much sums it up if u own any property u can secure the line of credit with the property, that mean if u couldn鈥檛 pay the line of credit bank will take the property.... secure like of credit have lower interest rate.... non-secured u don鈥檛 secure the line of credit with the property, non-secured line of credit have higher interest rate. A secured line of credit is usually reserved for consumers that have either had previous credit problems or no established credit history. They require a "security" deposit to be put into a savings or similar type account and the credit limit is usually equal to that deposited amount. These accounts typically have annual fees and somewhat higher interest rates than standard credit lines. Unsecured lines of credit do not require any "security deposit" as these consumer are usually well established with a good credit history. Hope this helps sch has the best answer thus far. i always try to have a 5 or 10k dollars CD where i Bank and if i need a fast 5k dollars line of credit i can walk in use it for security and get the loan the same day. and since the CD is drawing interest the only cost is the difference between what i am receiving and paying out. |
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