If you’ve ever done any research into swimming pool loans, there’s a chance you’ve come across verbiage that raised a few questions. Namely? The idea of a loan being “secured” or “unsecured.” This distinction has nothing to do with your lending institution’s ability to provide you with funds. Instead, it’s all about what is required of you, the borrower. At Central Bank, we believe that having a better understanding of the terms and practices makes for a better loan process for all involved. Read on for a closer look at secured and unsecured pool loans — and a few tips to make the process simpler.
What is a Secured Pool Loan?
A secured pool loan requires the borrower to offer up collateral as part of the approval process. (Most often that collateral is the borrower’s home.) Because this option is deemed a lower risk to the lender, secured pool loans tend to feature lower interest rates and longer terms. Failure to make payments on the agreed-upon timetable can negatively impact the borrower’s credit score and, in extreme circumstances, lead to loss of that initial collateral.
What is an Unsecured Pool Loan?
An unsecured pool loan is a lending option that does not require the borrower to offer up any collateral in order to receive approval. (Credit cards and student loans, though outside the swimming pool realm, are both examples of unsecured loans.) An unsecured pool loan is considered the riskier option from the lender’s point of view and will often include higher interest rates. As with secured loans, late or missed payments can have a negative impact on the borrower’s credit score.
Which Option is Right for You?
As with so many aspects of personal finance, it depends. A number of factors come into play here, from the amount of money you’re able to put down toward your pool, to the specific rules your bank has in place. Through our partner company, for instance, unsecured loans are available to clients nationwide, while secured options are only available to those in our home state of Texas. The best thing you can do is to reach out to a trusted lender who can help you evaluate your financial standing, look over your options and create a financing plan that makes sense. They might, for instance recommend an alternative financing path, such as a home equity loan, home improvement loan or home equity line of credit (HELOC).
We hope the above information clears up a few of your questions surrounding the swimming pool loan process. If you’re interested in learning more — or ready to get the ball rolling on a better backyard — feel free to contact Central Bank. Our financing experts are here to help, and we look forward to working with you!