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Guaranteed Personal Loan

The term guaranteed personal loan is somewhat misleading because all personal loans guarantee a payment of cash to borrowers.

In the case of storefront lenders and check cashing floors, the borrower is handed an amount of cash when the loan transaction is complete. In online cash loans the lender electronically transfers the funds directly into the borrower’s bank account. In either case the borrower is able to get a set amount of cash quickly which is the purpose of cash loans.

There is another use of the term guaranteed personal loan and that is as another name for a secured cash loan. In a secured loan a person puts up something as collateral, in return for the money lent the lender gets the right to seize the collateral if the loan isn’t paid.

Types of Guaranteed Personal Loan

The type of guaranteed personal loan that most people are familiar with is a pawn loan. In a pawn loan the borrower turns an item over to the pawnbroker in exchange for a sum of money. The borrower then has a period of time usually 90-120 days to pay off the loan. If the borrower doesn’t pay the loan the lender has the right to sell the collateral to cover his losses.

Another kind of guaranteed personal loan is a mortgage or real estate equity line of credit. In these loans a piece of real estate or equity in a piece of real estate is used to secure a line of credit. The advantage to mortgages and equity lines of credit is that interest on these loans is much lower than interest on pawn loans and cash loans.

An auto pawn loan is a guaranteed personal loan in which the title to a vehicle is used as collateral. The lender gets the right to sell the vehicle if the loan isn’t repaid. To get these loans a borrower will have to have title to a car or other vehicle.

Advantages of Guaranteed Personal Loans

The biggest advantage to guaranteed personal loans is that a borrower doesn’t have to go through a credit check. Another advantage is that the borrower can default on the cash loan with no risk in the case of pawn loans. A disadvantage of pawn loans is that the borrower loses the property used as collateral.

Another big advantage to guaranteed personal loans from a pawnbroker or storefront lender is that they can be taken out very quickly. A person can get these loans in just a few minutes and have the cash quickly.

Disadvantages of Guaranteed Personal Loans

The biggest drawback to guaranteed personal loans is that the amount of money which can be borrowed is limited to a percentage of the value of the collateral. Lenders have to limit the amount in order to make a profit if they sell off the collateral. A good rule of thumb is that a person will be able to borrow about half the value of an item pawned.

Another drawback is that lenders will limit the kind of goods that they loan money against. Many pawnbrokers will refuse to take in certain items such as electronics because they have little or no resale value. In general, pawnbrokers prefer things like jewelry and coins which retain value as collateral for loans.