Secured versus Unsecured Loans: What Every Investor Should Know

 |  Investing in Promissory Notes
secured versus unsecured

By J.P. Dahdah, Founder & CEO of Vantage

As a private lending investor of a Self-Directed IRA, one of your top concerns will be securing your investments. Because, while strong and consistent cash flow will provide your return and often drive an investment, security is also a key consideration.

And you do have choices for a Self-Directed IRA loan security:

A secured loan is one in which there is a property or asset that guarantees the loan. This means that if the borrowers default on any payment, the lender has a legal claim to that property or asset. In the case of property some lenders prefer not to foreclose immediately because of the tedious process involved and the costs. Most would rather allow for some recovery period for the borrower or for the borrower to work out some repayment option, before taking the final step of foreclosure.

An unsecured loan, does not offer security, but allows the application of a higher interest rate due to the higher risks involved.

Whether you choose to purchase a secured or an unsecured loan for your Self-Directed IRA, you still need to find deserving borrowers who are committed to bringing their financial projections to fruition and meeting their repayment obligations in a timely manner.

For more information on how you can discover your IRA investing alternatives, contact our team at (866) 459-4590 or ClientService@VantageIRAs.com.