How do secured loans work?

Monday, October 29, 2007 | Labels: | |

A secured loan is one that is secured against an asset, usually your home, and these loans can often take longer to process that unsecured loans simply because of the additional information required, such as property valuations and proof of home ownership. However, this type of loan is also the most affordable option for many borrowers and there are a number of factors that can determine how much you will end up repaying on a monthly basis.

You will often find that the interest rates charged on secured loans are very competitive, so you can enjoy real value for money, as lenders can afford to offer lower interest rates because the loan is secured against an asset. You will also find that secured loans are available over a longer term, which can help to keep the monthly repayments down because the overall debt is stretched over a lengthy period. In addition to this, you will also find that your borrowing power is likely to be far higher with a secured loan that with an unsecured loan, and most lenders will base the amount that you can borrow on the available equity in your home, which is the market value of your property minus any mortgage or other loans already secured upon it.

Another great thing about secured loans is that they are suitable for those with a bad credit rating. Providing you are a homeowner, you should be able to find a lender that can provide you with a competitive bad credit loan even if you have a tarnished credit rating, whereas you could find it very difficult or even impossible to get an unsecured loan if you have a poor credit history.

Comparing secured loans is easier than ever these days, as you can simply go online and compare the different loans and rates available. You can then make your decision and even your application online, and in many cases you will receive an instant decision in principle on your loan application


Glossy Blue by N.Design Studio
Blogger Templates by Blogcrowds