Classes of Loaning Systems

There are different types of loaning systems present in the field of financial management, although, there are monetary programs are categorized into two main types: secured and unsecured loan. Secured loans are the type of loans that are guaranteed to be paid one way or another. Collaterals, as financial management practitioners call it, is a technical term used to refer an asset that can be claimed by the lender in case a borrower refuses or is not able to pay his or her debt.

Unsecured loans, on the other hand, are types of loans that don’t have the advantage of retrieving tangible possessions if in any circumstance the borrower happens to be incapable of paying back his or her credit. These types of loans, however, demand greater interests than secured loaning systems. Unsecured loans usually don’t require long-term application processes as well.



Secured loans include house, car, and other mortgage loans. Other secured types of loaning include nonrecourse loan, foreclosure, and repossession loaning. These loaning types offer less interests and could also take some time in processing. Secured loans require deep and thorough investigations or analysis about the debtor’s background before making the agreement. The debtor’s credit history and income stability would be researched for his or her potential of paying back.

Unlike secured loans, unsecured loans, such as cash advances, don’t need long processes to be approved. In fact, some of them can be done online for immediate transactions. Some applications forms are submitted online and the cash can be received as fast as one or two days.



Cash advances, however, are not as convenient as secured loans when it comes to interest rates. Interest rates increase drastically when not paid on the due date. These transactions only ask for the borrower’s SSS and bank account number as details for negotiating. Unsecured loans should be examined strictly to avoid deceptions.

Cash advances can also be called payday loans, because the borrower needs to repay his or her credit on his or her payday. Penalties will be charged if some situations take place wherein the mortgagor won’t be able to pay back.

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