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  Category: Articles » Finance » Loans » Article
 

The Secured Loan- Uncovered and Explained




By Mary Simone

Have you ever tried to have a business conversation with a loan professional that spoke to you in such a way that the fancy terminology made you feel ignorant? Did you have any idea what they were talking about? If you're looking for a basic summary of secured loans, you've come to the right place. After reading through this single page, you will possess enough information to further your education about secured loans, as they are uncovered and explained for the "non-financial professional" person to understand.

First and foremost is the term "secured loan". The word "secure" means "free from risk". Security in this sense is in regards to the lender. A secured loan is money granted with something (like a house, boat, car) held as collateral. Simply put, if you don't pay your loan as arranged, the financial institution that gave you the loan has the right to come and take your property as payment.

There are a few other differences between secured and unsecured loans. For example, the amount of interest paid on a secured loan is significantly lower than that of an unsecured loan. The reasoning behind this goes back to the original definition of secure and the amount of risk involved. A bank will charge you less money if they are guaranteed a "win-win" situation, like with a secured loan.

Of course, the amount of money borrowed will affect the payment amount. Traditional, secured loans range from £3,000 to £50,000, but have been known to be as high as £250,000 from certain lenders. A predesignated loan payment will be paid for a prearranged amount of time. Both the borrower and lender should be aware of these terms before any legally binding agreement is signed.

There are several laws in place to protect both the borrower and lender in the secured loan industry. If the borrower is purchasing a home with a secured loan (often referred to as a mortgage), the loan is subject to the Consumer Credit Act of 1974. Within this act are the strict guidelines as to the act of lending money for loans up to £25,000. Any loan for a greater amount is not regulated. Before a regulated secured loan is written, a legally binding credit agreement for the terms of your individual loan program must be signed by all involved parties. A consideration period of at least 7 days must be granted to the borrower by the lender for you to change your mind and rescind on the loan.
 
 
About the Author
Mary Simone recommends that you visit http://www.onlyfinance.com/ for more information on secured loans.

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  Some other articles by Mary Simone
The UK Consumer's Guide to Shopping for Secured Loans Online
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The UK Consumer's Guide to Shopping for Car Insurance Online
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The UK Consumer's Guide to Shopping for Mortgages Online
Starting with the absolute basics, a mortgage is a loan for a house or other piece of property, financed by a bank or other financial institution. If loan is ...

Guide to Getting UK Car Insurance
Remember back when you had to travel from insurer to insurer or spend hours on the telephone ringing up possible ...

Everything You Always Wanted to Know About Secured Loans
Since the very first bank in the world opened its doors in 14th century Italy, lenders have been asking for some sort of ...

Shopping for Car Insurance in the UK
Just like with shopping for just about everything else in the UK, finding the best deals on car insurance is as quick and ...

  
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