Secured Loans

Secured Personal Loans

Secured personal loans offer a financial solution to consumers who seek affordable financing for debt consolidation, home improvement, choice medical procedures or other substantial goals. Loans that are secured by personal assets such as a house or an automobile generally have a lower interest rate and more competitive repayment terms. You can find secured loans with favourable terms by comparing the current rates offered by multiple financial institutions.

Your personal financial circumstances will determine which of the many types of loans on the market is right for you. Some consumers prefer the flexibility of a credit card, which offers a revolving line of credit that may be used for different purposes. Others prefer not to risk their personal assets by taking out secured loans. However, for many individuals and families, secured arrangements provide the opportunity to pursue specific objectives without taking on high monthly repayments or high interest rates.

Choosing a Loan Amount

Because secured personal loans are guaranteed by valuable assets, it's important to borrow only as much as you need to meet your goal. Banks, building societies and specialist lenders offer secured personal loans ranging up to 25,000 pounds. Some lenders offer secured loans of up to 50,000 pounds or more, provided that the personal collateral used to secure the agreement has adequate value, and the borrower has a strong financial history.

A free online loan calculator is a simple yet convenient tool that can be used to determine how high your monthly repayments would be if you were to borrow a specific sum of money at the lender's interest rate. The loan amount, the interest rate and the length of the repayment term may be adjusted to reflect different values. When you're comparing the rates for secured personal loans from different banks or building societies, use a calculator to see which institution's terms are most favourable for your circumstances.

Unlike unsecured loans, which are issued based on the borrower's credit history and income, secured personal loans are guaranteed by important personal property, such as a home. If the borrower defaults on the agreement, the lender has the right to repossess the property. Repossession is not an overnight process, and most reputable lenders are not so inflexible as to seize a home or car after the first missed repayment. However, failing to repay secured personal loans can eventually lead to the loss of extremely valuable assets.

When you calculator the amount you can afford to borrow, bear in mind that your financial circumstances may change over the life of the contract. You may suffer an injury or illness, lose a job or separate from your spouse or partner. Even a happy event, such as the birth of a child, may have a serious impact on your ability to keep up repayments. Choose an amount that allows you to achieve your goal without stretching your budget. Consider insuring your repayments with income protection insurance or another form of payment protection.

Selecting Personal Collateral

The collateral used for secured personal loans must have sufficient value to cover the balance owed if the borrower defaults. Homes are most commonly used as collateral, because of their high value and because they are fixed in place. Automobiles, boats, motorbikes and other mobile property, on the other hand, may be relocated or hidden if the lender decides to repossess the property. For this reason, most financial institutions prefer to have a contract secured by a house.

Secured personal loans that are guaranteed by a house are also known as second mortgages or homeowner's agreements. If you choose to use your house to secure a contract, the property will need to be inspected to confirm its value. Some institutions will perform this service at a fee, whilst others will allow you to schedule an independent valuation.

In addition to the valuation of your house, a lender will want to know the details of any other debts against the property. If you have a mortgage, this obligation will need to be taken into account, as well as any other contracts that have been guaranteed by your property. Once your credit score, your earnings and your debts have been considered and the property's value has been confirmed, the bank will make a decision about loaning the funds.

Regardless of your circumstances, it is imperative to seek financing from reliable institutions. Borrowers who have a history of poor credit may feel driven to seek assistance from unlicensed lenders. If you have a history of a County Court Judgment or bankruptcy and you are turned down by high street banks, seek help from a reputable adverse credit lender that is licensed by the Office of Fair Trading. Secured personal loans can open up opportunities for improving your finances or upgrading your home if you seek financing from trusted lenders.