Question
whats the difference between an unsecured, and secured personal loan?
Also, say for example I borrow $20,000 over 3 years at an interest rate of 12.5 % but pay the loan off in two years, will I be charged the 3 years interest or 2 years? Thanks in advance to anyone who answers!
3 years ago - 5 answers
Best Answer
Chosen by Asker
secured=colladeral unsecured=no colladeral and your intrest is the first thing thats normally paid off on a personal loan.
by main stream
3 years ago
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Other Answers
agree with main stream and the unsecured loan = HIGHER interest usually
by tomkat1528- 3 years ago
A secured loan is back by an asset so the lender has more protection. Unsecured is a flat out loan with no collateral incase you default. Typically people with bad credit need to get secured loans...
by iceman- 3 years ago
What people have said about interest being paid first is true. However it may have been a misguided answer to your question. Most loans accrue interest daily based on the remaining principal balance. What that means is every day you have a balance a certain amount of interest accrues on it. Then every payment you make first goes to accrued interest and the rest goes to the principal balance. If you pay off the loan in 2 years that means there is no balance remaining for interest to accrue on so you will pay less interest by paying off the loan early. It is not as if there is a set interest balance that you pay off completely before paying any principal. Depending on the terms of your loan of course.
by lehaoz- 3 years ago
usuallly a credit score an d the amount of interest. u will be charged only for the two years.
by judy b- 3 years ago