ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If you want a pawnshop loan, the pawnbroker will not pull your credit but instead offer you a loan based on the value, condition and resale potential of your item. The amount you get largely depends on the pawnshop, which might lend as little as 15% or as much as 60% of the item’s resale value.

Detailed explanation-2: -Collateral is any valuable asset-like a car or a home, for example-that can help borrowers qualify for and secure a loan. Collateral may reduce risk for lenders by ensuring they obtain security for some or all of a loan. Secured loans are a type of loan that requires collateral.

Detailed explanation-3: -Amortized Loan: A loan to be repaid, by a series of regular installments of principal and interest, that are equal or nearly equal, without any special balloon payment prior to maturity.

Detailed explanation-4: -Unsecured Credit Card Credit cards can be secured for borrowers whose credit needs work, or unsecured. Used wisely, they can be another alternative to a collateral loan, but they may carry higher APRs.

Detailed explanation-5: -Traditional lenders, like banks, typically look for secure assets like real estate or equipment as collateral, although anything of value the lender can easily sell, to satisfy your debt should you default, might be accepted-depending on the lender.