Many borrowers like the idea of unsecured loans. The fact that no guarantor and collateral would be necessary, the reality that credit score may not play a crucial role and the relatively easy eligibility criteria certainly makes unsecured loans more desirable. But there are some advantages of secured loans that should make you contemplate both options.
Unsecured short term loans work best for those who don?t have any collateral or security to offer and those who have bad credit and don?t have any guarantor or cosigner. The disadvantage of unsecured short term loans is the high rate of interest. There is some cost of convenience that you should bear. With secured short term loans, the approval process is longer and more stringent, the requirements may be a bit demanding and you may have to furnish more documents but you will get a better deal. The rate of interest will be lower, the repayment term may be more favourable and you would also qualify for a higher loan amount.
When you pit the advantages and disadvantages of both secured and unsecured short term loans, you need to figure out what suits you more. There are borrowers who can very well opt for secured loans but opt for unsecured loans instead. There are some borrowers who would want to apply for secured loans but don?t qualify and hence settle for unsecured loans.
Being able to borrow more and at a lower rate of interest would always be better. It is not as if your security or collateral would be confiscated should you miss one repayment. There are escalation protocols and you can always reclaim what is rightfully yours as you repay the full loan with interest eventually. Do consider what you would be eligible for and be open while comparing secured and unsecured short term loans.