A Beginner's Guide to Secured Loans
Written by: John Mussi
You may have heard the term "secured loans" used in the past, not knowing exactly what it meant. but now that you're in the market for a loan you find yourself wanting to learn all that you can about secured loans.
In essence, secured loans are little more than loans that give some measure of a guarantee to the lender that the loan will be repaid one way or another.
Below you'll find some basic information about secured loans and the implications of choosing this form of loan, as well as what you should expect as far as loan terms and interest rates should you choose to pursue this lending option.
Secured loans are loans that require collateral, or some property of value that can be held in one form or another by the lender to make sure that the loan is repaid as promised. In some cases the collateral is literally held by the bank or lender, but in many cases the lender simply gains a legal claim to it which is known as a lien.
Should the borrower fail to repay the loan, the lender is legally entitled to take possession of the collateral and sell it. the process costs the lender both time and money, however, and pretty much all lenders would prefer to simply work out solutions with borrowers so that the secured loans are repaid satisfactorily than repossess and sell the collateral item.
Common collateral for secured loans includes automotive titles, property deeds, home equity, precious metals, and collectables or antiques, though certain types of loans may require different types of collateral and in some financing loans such as mortgages and vehicle financing, the purchased item serves as the collateral itself.
Of course, different lenders may request that specific types of collateral be used such as home equity for online loans or automotive titles for low value loans.
When applying for secured loans, there are several expectations that you should have for the loan. Unless there is some specific reason, the interest rate for the loan should be lower than the rate for a loan without collateral. after all, the security of having the collateral for the loan means that the lender isn't taking as much of a risk.
The lender should also grant more favorable repayment terms, allowing you several payment options and possibly even benefits for paying off the loan early. You should also be able to qualify for some secured loans even if you've had credit problems in the past. after all, the loan is secured so as to provide a guarantee of repayment.
If the lender that you're applying with doesn't meet these expectations, feel free to shop around at traditional and online lenders until you find one that does.
You may freely reprint this article provided the following author's biography (including the live URL link) remains intact:
About the Author
John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the www.directonlineloans.co.uk website.
Secured Car Loan - If Car Signifies A Second Home To You
Cars – they are your passion, necessity, luxury, earning member. They have speed, they have music, they have curves, they have comfort, they have security, they have safety - they have something for everyone. Secured car loans can realize your car...read more
What Is The Best Way To Pay Off All Of My Debts Using A Free Debt Consolidation Loan?
Between daily expenditures and monthly bills, most people get
bogged down by outstanding debts with high interest rates. When
this happens, they usually don't know what options they have.
Most assume they are on their own unless they decide to...read more
Ten Ways Start-ups Use Venture Leases And Loans To Generate Millions
The rise of venture leasing and lending has created an opportunity for sophisticated entrepreneurs to gain a competitive advantage. Savvy entrepreneurs are using venture leases and loans to generate millions of dollars for shareholders by leveraging...read more
Return to Home