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A personal loan (sometimes referred to as an unsecured or signature loan) is a loan that a lender
makes that is supported only by the borrower's credit-worthiness rather than by some sort of
collateral.
Advantages:
- No Collateral Required
- Receive Funds Quickly
- Fast Credit Decisions
- Receive Entire Amount Borrowed Up Front
- Fixed Payments On The Amount Borrowed
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A home equity loan, sometimes referred to as a "second mortgage", enables you to borrow the maximum amount
approved by the lender in a lump sum, using your current home or property as collateral. Once the funds are disbursed, you pay the
loan back with interest over a fixed period of time. This product is usually used for big purchases or debt consolidation and interest rates
are generally fixed.
Advantages:
- Predictable Fixed Payments
- Low Interest Rates
- Possible Tax Advantages
- Longer Loan Terms
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A home equity line of credit (HELOC) is a form of revolving credit in which your home serves as the collateral. Think of it as a credit card secured by the equity in your home.
Once the maximum amount you can borrow is established, you can draw down from your line of credit
as needed. Separate checks will be issued by your lender for each advance against your line.
You are only charged interest on the outstanding balance, much like a credit card. In contrast to a Home Equity Loan, Home Equity Lines of Credit
typically have variable interest rates that are adjusted by a bank or home equity lender when the prime rate changes.
Advantages
- Draw Down Money AS Needed
- Low Interest Rates
- Possible Tax Advantages
- Borrow Up To 100% Of The Equity In Your Home
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A secured loan is an arrangement in which a lender lends money to a borrower based on the value
of some asset pledged as collateral (such as a boat, RV, car, commercial vehicle, etc.) as well as the
general credit worthiness of the borrower. For example, in the case of a boat loan, the boat itself
would serve as collateral. The use of collateral to secure the loan generally permits the lender to loan funds
at a lower interest rate than would be possible with a totally unsecured loan. There is usually a
pre-determined period of time within which the borrower can repay the loan.
Advantages:
- Flexible Rates Depending On Creditworthiness of Borrower
- Low Monthly Payments
- Lower Interest Rates Than Loans That Are Unsecured
- Lenders Knowledgable With Respect to Specific Asset
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