Secured Loans

Secured Bad Credit Loans

Secured bad credit loans may be of use to you if you are in the market for a credit product and have a poor history which makes it difficult for you to borrow large amounts without collateral. Loans are very useful and one of the main ways people in the UK handle their finances. Borrowing and repaying is just a fact of life for most of us and so not being able to engage with it can be frustrating. If you have trouble finding a lender who can offer you decent terms or a large enough amount of capital due to you bad rating, you might want to look into secured bad credit loans.

Secured Lending

Secured bad credit loans are also known as asset backed lending products. This means that the original capital forwarded as part of the process is backed up by an item of property offered by the borrower as collateral. This security means that, should the borrower default on the arrangement and fail to honour their debt, the lender can seize the property in lieu of payment. Obviously there is a risk involved here which needs to be taken into account but there are also many advantages to secured bad credit loans which should be considered.

First of all, if you suffer from bad credit and need to borrow money, the chances are it will be difficult for you to secure any kind of loans or secured mortgage loan deal without offering collateral. This might seem unfair but it is simply the way responsible lending works - the lender needs reassurance that should things go wrong they will have their debt honoured and you will not have to declare bankruptcy to avoid prison. Secured lending allows for this deal to manifest itself and so is helpful to both sides in this equation.

Secondly, the terms and conditions offered on secured loans are often much better than those offered on unsecured products. This is because the lender does not have as much to worry about in dealing with a borrower. Unsecured lending, particularly when it is offered to those with bad credit ratings, is characterised by short repayment terms, high interest rates and a general haste on the part of the lender to get the debt cleared. Secured bad credit loans do not have this problem as the collateral makes the lender more relaxed and, therefore, more generous with the terms.

This does not mean that taking on secured loans is always the right thing to do, particularly if your rating is bad. If you have consistently found it difficult to repay large scale debt you might want to think twice before taking on any more. Then again, if you have budgeted correctly and have complete faith in your abilities to meet the repayment on a new loan, then there is nothing stopping you. The main thing is to be careful. If you have serious doubts about your ability to handle lending then you might want to think hard about your other options for whatever purchase you need to make.

Deciding on the Asset

So, you have decided that you need a credit product and that secured bad credit loans are the right route to take. How, now, do you decide on the actual item of property you have to put up for your collateral? This will depend on a few variables but mainly it will be about how much cash you need and how soon you need it. Most asset backed loans are secured with the borrower's home. This has the advantage of being highly valuable and, thus, fetching a high price but has the obvious disadvantage of putting a very valuable item at risk.

If things go bad and you fail to repay the credit company, the property is at risk of seizure. While your lender is within their legal rights to seize the collateral on a loan as soon as a single payment is missed, in reality that happens rarely if ever. In general a lender will give the borrowers of secured bad credit loans three to four months to repair the arrears on an account. If you miss a payment and are doubtful that you can fix things, you should contact the lender to discuss the terms of the payment and see if you can stretch it out to make the payments easier.

Secured bad credit loans are a good way for people who have bad credit to get a loan in the UK. As the product is secured by an item of property this means you will find lenders who are much more forthcoming with good terms and high amounts of capital. So if you have trouble finding loans because of poor ratings, look into secured bad credit loans in the UK and how they might help you.