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What is a secured loan?
By Jeff Lakie
We certainly don't live in a world that waits for us to save up our
money before we can pay for something. It used to be that way, but
not any more. Costs are have risen higher than income in many cases,
making loans and credit a necessary part of life. If you find that you
need a loan, a secured loan is a way to increase the amount that you
can borrow and often enable you to borrow it at a better rate.
What is a secured loan?
An unsecured loan is a loan of money that is simply leant to you based
on your credit rating or on your word. If you were to default this loan,
you would be expected to pay it and your name would probably be
submitted to a collections agency to make the collection or you might
be taken to small claims court. However, that is all the lender can do.
If you need to borrow a greater amount of money or want to borrow
money at a better rate, borrowing against some kind of equity is the
way to go. Perhaps the equity is your home, or some other kind of
possession, like valuables, stocks, or your car.
How is it better than an unsecured loan?
Borrowing against this equity tells the lending agency that if you cannot
make your payments, they can take your equity as an alternative form
of payment.
Lending agencies like this because it means that they have some
security on the money you owe, in case you default on your payments.
At the same though, coming to you to take your home away from you
is difficult to do for them, since they are bankers and not realtors. They
may be more willing to renegotiate payment terms if that is what you
need to do.
So, rather than spend an arm and a leg on unsecured loans, if you need
to borrow money, consider getting a secured loan. You'll get the
chance to borrow more money, at a lower rate, and with the possibility
of better payment terms.
About the Author
Jeff Lakie is the founder of Secured Loan Quotes a website providing information on Secured Loans
Article Source: http://www.simplysearch4it.com/article/10363.html
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