Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Sep 9, 2011

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For individuals in need of cash fast, personal loans can be a quick short-term solution. There are two different types of short-term personal loans, secured and unsecured.

If a personal loan is secured, the borrower has put up an asset, such as property, as collateral if he or she fails to make payments, in which case the lender can possess that asset as replacement payment. Most commonly, the asset is the borrower’s home or car, but it can be anything that he or she owns that is of a high enough value.

This financial insurance usually allows the lender to grant a loan with a greater amount and a lower interest rate. This option is also beneficial for borrowers with poor credit, as the asset provides a concrete guarantee that the lender will receive payment. It may also provide enough insurance to allow you to pay off the amount over a longer period of time.

An unsecured loan is an option when the borrower does not have or does not want to risk their property to pose as collateral. Because the lender does not have the financial security of collateral, they often will set higher interest rates and may also charge fees and penalties. The amount the lender grants will also most likely be lower and to be paid back over a shorter period of time.