A: Payday loans are a form of an unsecured loan, but what does that mean for you?

An example of a secured loan is a mortgage. Your loan is secured against your house, which means that the bank can reposes your house is you fail to pay your loan and default. Secured loans are issued by banks and other financial institutions and usually require a lengthy and involved application process. Secured loans are also for larger amounts of money than what an unsecured loan may be issued for. The problem with secured loans, however, is that many people who rent their homes are unable to make it through the rigorous application process.

The best alternative for those who are ineligible for a secured loan, or just need a small loan to help them in a pinch, are unsecured loans like a payday loan. Unsecured loans can be issued in amounts ranging from $100 to $1,000 and do not require that you secure the loan against any of your assets. This makes this type of loan perfect for those families who rent their home or don’t want to risk having their car repossessed should they default on the loan.

The application process for an unsecured loan is much less strict than the application process for a traditional secured loan. If you meet the basic requirements for approval, plus any other criteria that your lender may put forth, you can apply. Because of the unique application process and the fact that you do not have to worry about losing any of your property, unsecured loans are a great choice for families that don’t need a large credit line.