There are many types of loan that one can take out nowadays and all of them are different to the other.
One of the most popular types of loan at the moment is a secured loan.
Secured loans are called secure loans because they are secured against the value of a property, thus making them secure in the eyes of a lender.
Secured loans differ from other types of loan because they require that a form of security is provided by the receiver. This is to reassure a lender that payments will be made.
Secured loans are not to be confused with personal loans. Whereas secured loans ask for an incentive from the loan company very usually in the form of a housing property or a vehicle, personal loans run through numerous credit checks to assess eligibility.
For this reason, secured loans are most popular amongst those whose credit rating isn’t above 80%.
Practically all high street banks have secured loans products that consumers can apply for. Increasingly, smaller lenders are also providing secured loans to individuals whose fixed assets are not a big enough to guarantee in the eyes of a main stream bank.
Secured loans are generally a very reliable way of receiving a loan. Their approval depends solely on your ability to offer security against the total cost of the loan.
As with all loans which are not repaid or when payments are defaulted, there are risks to the consumer. Because of the nature of a secured loan, the risk to the consumer is very usually higher than with a personal loan.
The biggest risk with a secured loan is that if you default on your payments, you could be made to sell your home to clear your debt or your vehicle, depending on the asset signed off.
This makes secured loans a headache for those who run in to problems with repayments. For those who pay back in good time, though, there is no risk to your property or asset.
Secured loans are most popular amongst homeowners with an existing mortgage. They are most commonly used within the home once taken out, to improve on the standard of living.
Existing customers of a bank have a higher chance of being able to take out a secured loan versus a new customer. However, so long as property is provided, a lender may very well approve your secured loan based on this.