Question

How are the costs of secured and unsecured loans different?

Question options:

A secured loan typically has lower interest rates costing less; an unsecured loan typically has higher interest rates costing more.


A secured loan is typically associated with a lower fee schedule and so costs less; unsecured loans typically have a higher fee schedule and so they cost more.


Secured loans generally have longer repayment terms and cost more; unsecured loans generally have shorter repayment terms and cost less.


Secured loans usually carry a higher interest rates and cost more; unsecured loans usually have lower interest rates and cost less.

Answer 1

Because your assets can be seized if you don't pay off your secured loan, they are arguably riskier than unsecured loans. You're still paying interest on the loan based on your creditworthiness, and in some cases fees, when you take out a secured loan.

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