We’ll start by defining another term: collateral. You’ve probably heard it before. Collateral is an item of value that a borrower surrenders to a lender to hold during the term of the loan. It’s usually a home, but sometimes lenders accept a piece of expensive jewelry or the title to a car. If it holds equal value to the amount of money loaned, it will often work as collateral.

A home mortgage is the most common use of collateral. If a home loan borrower cannot make his or her monthly payments, the lender can claim and sell the home to recoup their losses on the loan. But other, less conventional forms of collateral have also been accepted. Banks have accepted lottery tickets, livestock, and even bitcoin.

In the simplest terms, collateral is a form of insurance for the lender. That’s why the industry calls a loan with collateral a secured loan. The lender secures their money using an object of value before lending it. In the case of a default, the collateral becomes the lender’s property.

This seems obvious, but it’s important information if you’re going to understand the benefits of an unsecured loan. The name might be off-putting, but for personal loans, it’s the industry norm. Helix offers unsecured installment personal loans of up to $4,000. All with no collateral.

You’re probably already familiar with one or more of the following types of unsecured loans. You may hold more than one of them yourself.

• Revolving Loan: This gives you an open line of credit with a limit. Spend, repay, and spend again. If you have a credit card, you have an unsecured revolving loan. Each purchase is like a tiny loan, to be repaid on your next billing cycle.
• Consolidation Loan: This occurs when a debt consolidation service buys your smaller, individual debts and gathers them into a single loan for you to repay, hopefully with a lower interest rate.
• Student Loan: If you’ve been to college, chances are you’ve taken out a student loan, either from the federal government or a private lender.
• Term Loan: Helix personal loans fall under this category. The lender and borrower agree on a fixed principal amount, interest rate, and a repayment schedule prior to borrowing.

All four have one thing in common: They require no collateral, making them unsecured loans. Some unsecured loans, like student loans and credit cards, are easier to get than others, like term loans. The ease of unsecured borrowing is often dependent on one major factor: your credit score. So if you’re just getting started in establishing your credit history, and your score is low, this can be difficult. (Not with Helix, but we’ll get to that in a moment).

Secured lenders know how difficult unsecured borrowing can be for sub-prime borrowers, so they often target this demographic specifically with ads promising quick solutions. Now, not all secured loans are out to get you. If you’re buying a home, for example, a mortgage is a perfectly reasonable way to do it. However, there are some secured lenders you should watch out for.

Probably the most common is the title loan. They’ll accept the signed title for your vehicle as collateral for a quick payout. If you default on this loan, they have the legal right to keep your car, and will often sell them at auction for less than they’re worth.)

There are a few reasons we don’t advise you to use title loan services. First, they tend to hide fees and charges in their confusing terms to trick you into paying more than you’d planned. Second, if you can’t repay the loan on time, they can repossess your car, which you probably need in order to earn money.

Another common secured lender offer is a payday loan. They accept collateral not in a physical form, but by claiming your next paycheck and advancing you the money right away. Unfortunately, this advance often carries hidden fees and confusing terms that can create serious financial setbacks to anyone trying to repay. Often borrowers are forced to advance another paycheck to pay off the first loan, and the cycle continues. Interest and fees accumulate until they often exceed the original loan amount. We strongly advise against using these predatory services.

Secured loans have one thing in common: inflexibility. If you default, your collateral belongs to the lender.

Now for the good news. You don’t have to take these risks. Personal loans through Helix provide sub-prime, first-time borrowers with options for unsecured personal loans. Yes, we know your credit score might not be very impressive yet, but we’ve seen countless Helix customers— with sub-prime credit scores— repay their loans on time or even early through comprehensive budgeting, wise planning, and a firm understanding of our clear, simple terms. Then, when the loan is satisfied, they see a marked increase in their credit scores, thanks to their responsible personal loan repayment.

An unsecured loan isn’t unsecured for you. Rather, as lenders, we assume that risk. That’s why we work hard to educate our customers toward smart, reasonable borrowing practices.

Remember, not all secured loans are predatory. Many legitimate banks accept collateral, and there are some benefits to a secured loan. First and foremost, interest rates are often lower. Since the lender assumes less risk with collateral on hand, they can lower your monthly payments. The other major benefit is that if you do default, your account won’t likely be sent to a collection agency. Your lender simply keeps the collateral and settles the debt.

Borrowing, secured or unsecured, always presents some risk. Yet you can mitigate that risk with a solid repayment plan, and we’re happy to help you with that. Our fixed interest rates will help you a budget month to month, and we have no hidden fees or early repayment penalties for you to worry about. Once you calculate a monthly payment that fits within your budget, we’ll help you determine how much money you should borrow.

And the process is easy. Our online application can be completed in just five minutes, and you’ll hear back with an answer instantly. If we approve your loan, you’ll see the money in your account within one business day.

If you need money quickly, we recommend an unsecured personal loan, and at Helix, we can help you with that. Take a few minutes to fill out a personal loan application to instantly see if you are qualified and what your loan terms would be.