Secured vs unsecured… We aren’t talking about your garage. We are talking about secured vs unsecured loan agreements.
Secured or unsecured. What the hell are you talking about? Well, I’ll give you a small clue. I’m not talking about whether you have locked up the garage or not. I’m talking about secured vs unsecured loan agreements. Stick around and I’ll tell you what that means.
Hi everyone, Simon here from The Contract Company Contracts. It’s all we do all day, every day and sometimes every night. Lucky us.
The Difference between Secured vs Unsecured Loan Agreements
So what is the difference between a loan that’s secured and one that’s unsecured? Pretty easy. An unsecured loan does not link to any assets or security of the borrower.
This means if the person who’s borrowed the money defaults on the loan, then there’s nothing that the lender can seize from the borrower to recoup the money that’s been lent.
Not a good place to be for the lender. Right place to be if you’re the borrower.
A secured loan is one where the borrower has put up some sort of security, i.e. some of their assets, to secure the amount they’ve borrowed. So, if they default on the loan and lender comes after them for the money, the lender can seize the assets, which are the subject of the security.
The lender can sell those assets and recoup their costs and expenses in the amount of the loan. Then the lender can give the balance, if there is any, back to the borrower.
Great place for the lender to be. Not so good for the borrower.
One thing I will mention, too, is secured loans have the ability to be registered on the PPSR, which is the Personal Property Security Register.
So lenders can perfect their interest in the security that’s being put up under the loan agreement. Hope that helps. If you know someone who could use this information, please share this video.
Please like it down below and if you have any questions or queries, please get in touch with us. Simon at contractcompany.com.au or one-800-355-455. Thanks very much.