Everything You Need to Know about Secured Personal Loans

Money is a necessity of life as we use it to finance our food, shelter and clothing. We need money for the simplest things, like putting bread on the table, to the more expensive things such as luxury holidays. Unfortunately, money doesn’t grow on trees, and we generally need more of it than we actually have. One way to get this money we need is by taking out a secured personal loan.

What Is a Secured Personal Loan?

A secured loan means you borrow against something that you own. Usually, it is secured against the value of your home, but you can also borrow against things like your vehicle, jewelry or luxury items. However, you can only borrow against what you actually own. So, if you borrow against your property for instance, you can only borrow as much as the amount that you don’t owe on your mortgage. This is known as the equity.

The Benefits of Secured Personal Loans

There are various benefits to taking out these types of loans. These include:

  • They have flexible repayment periods, ranging from five to 25 years. Furthermore, they usually allow you to pay back the outstanding balance early without having to pay an early redemption fee.
  • Because the loans are secured, thereby removing a lot of risk from the lender, they are generally available at lower interest rates. This means that you don’t have to spend as much of your disposable income on the repayments.
  • Approval is generally much easier as well. Although your financial history will generally be reviewed, it won’t be held against you as much. This is again because it is secured against your property. However, the worse your credit rating is, the higher your interest rate will be as well.

Finding a Secured Personal Loan

There are a number of ways for you to find this type of loan. You could go directly to lenders, or you could use brokers who then scour the market for you trying to get you the best deal. What matters is that you take your time to actually compare the market and find the deal that is best for you. One of the most important things to compare is the interest rate. Although a loan will always cost you more than the amount you borrowed, it doesn’t need to cost you too much either. Hence, finding one with a reasonable interest rate is very important.

Never agree to a loan before you have completely read and understood the contract. Pay particular attention to the small print. Some disreputable lenders will put hidden fees and other negative clauses in these parts of the contract. Remember that you are securing your loan against something very dear to you, generally your house, and this means that you need to be very sure that you are able to keep up with the repayments so as not to lose your home.

Call or click to learn more about secured personal loans and other financial products.

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