Question

9) What is the difference between the conditions of secured and unsecured loans?

A) Collateral is required from the borrower for secured loans; no requirement for collateral is required for unsecured loans.

B) Longer payment schedules are associated with secured loans; shorter payment schedules are associated with unsecured loans.

C) Larger down payments are required for secured loans; smaller down payments are required for unsecured loans.

D) At least two cosigners are required for secured loans; only one consigner is required for unsecured loans.

Answer 1

A) Collateral is required from the borrower for secured loans; no requirement for collateral is required for unsecured loans.

Step-by-step explanation:

In a secured loan, the ownership of the asset lies with the lender. In fact, here, the interest rate on the loan is lower and the loan approval rate is faster. An unsecured loan is not backed by collateral and the lender lends such loans based on the borrower's credit score, previous financial history, net worth, etc.