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How Do Secured Loans Work?
By Mary Simone
If you're in need of money to purchase a home, car, or other piece of personal property, a secured loan is often the fastest, easiest means for you to get the needed funds. Most institutions will not balk at lending if there is collateral to guarantee the funds they lend you- your home, car, or other personal property item. This is a definitely plus if your credit rating has a blemish or two, as you will be able to borrow more money with a secured rather than an unsecured loan.
If you fail to pay the loan back, the lending institute will simply take the property that is connected to the loan. Secured loans are generally in a range from £3,000 to about £50,000, but can go as high as £100,000 depending on your situation, need and circumstances.
Refinancing a mortgage or other secured loan may enable the borrower to save a significant amount on monthly expenses by either extending the timeframe or terms of the loan, or paying off one loan with another that has a lower APR (Annual Percentage Rate). Secured loan interest rates are typically variable and follow the UK base rates, but can also differ significantly between lenders, so shopping around an comparing rates and terms is essential.
More often than not, the rates of secured loans are significantly less costly than the interest on credit cards and/or other unsecured lines and forms of credit, like personal loans. Refinancing your home to consolidate any personal, unsecured debt that you may have is really an option that is consistently growing in popularity. Seeing a zero balance on credit card statements is almost impossible to achieve when you can only pay the minimum amount due each month.
Available terms, amount borrowed and the assigned interest rate will vary, depending on the amount of equity you have in your secured property and your potential lender's view of your ability to pay (usually based on your credit report). If you are looking to borrow more than 80% of your property value, you can expect to pay a higher APR than if you're financing a lesser percentage; if your credit report has negative marks on it, you will also have to pay more for your loan.
Repayment plans are often on a monthly basis on a predesignated date and term, depending on the lender, and typically range from 3 to 30 years, whereas unsecured lending is usually no longer than 7 years. Be sure to read all of the terms and conditions including any fine print before signing your name on the dotted line.
About the Author
Mary Simone recommends that you visit http://www.onlyfinance.com/ for more information on secured loans.
Article Source: http://www.simplysearch4it.com/author-articles/5961/1.html
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| Some other articles by Mary Simone | |
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