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Secured Personal Loans

The business of the banking sector usually involves borrowing and lending. There are a number of ways in which people can borrow money depending on the purpose for which they require the amount. Personal loans form one of the most popular types of financing for meeting the financial requirements of people.

Basically there are two types of personal loans:

Secured personal loans

Unsecured personal loans

When taking the unsecured personal loan people are not required to provide any collateral for the loan. They can borrow without putting their asset on risk. On the other hand with the help of secured personal loan they can borrow money by giving a collateral for the loan. Usually for taking secured personal loan people would provide their house, car or any other fixed asset as collateral.

The secured personal loan has a lot of advantages like:

Lower interest rate

Longer term of repayment up to 30 years

Lower monthly payments

You can borrow a large amount

The approval process is simple

These loans are readily available

The only disadvantage associated with these loans is that in case the borrower fails to make the payments on time he would end up losing his property. Hence the payments towards the secured personal loan should be made on time. It is therefore advised that the person analyzes his financial condition and then applies for the loan after assessing whether he would be able to keep up with the payments towards these loans.

The secured personal loan can be used for different purposes like sponsoring home improvements, debt consolidation, medical bills, educational expenses, alimony payment, wedding plans, financing a holiday etc. The secured personal loan is easy to find and is available with all the lenders hence you can have varied options for selecting the offer that best suits your requirements. You should get quotes from different lenders and compare the loan quotes so that you can decide as to what would be the best option for you.

When giving out the secured personal loan the lender would typically take the following things into consideration:

The value of the collateral that is pledged

The credit score and the credit history to determine the creditworthiness of the borrower

Usually the secured personal loan is approved because of the fact that the loan is secured but in case you have bad credit you would have to pay a slightly higher interest rate in comparison to people who have a fair credit. With the advancement in lending options there are many lenders that have resorted to giving out online secured personal loans. With the help of online lending it has become easy for the borrowers to apply for the loans and the loan is approved at a faster rate.

The only time taking process for the approval of the loan application is the time taken to assess the value of the property. When you start looking for lenders for secured personal loan the first place that you should approach for the loan is your own bank. As you have been a regular customer the bank would readily approve your loan application without any hassle. However before signing up for any loan you should make sure that you have read the terms and conditions of the loans properly so that you would know what you are signing up for.

It is advised that you read the fine print of the loan carefully so that you are assured that there are no hidden costs associated with the loan. It is also advised that you compare the APR of the loan rather than just comparing the interest rate. The APR or the Annual Percentage Rate of the loan would give you the total cost of the loan on an annual basis and you would know how much would you have to pay. Besides this you should also get the loan amortization schedule from the lender so that you are aware as o how much are you supposed to pay every month and how much are you paying towards the interest rate and the principal of the loan.

Qualifying for the secured personal loan however is not easy. Having a house that can be offered as collateral is not just the only criteria. When the person applies for the secured personal loan he should also make sure that the house has some equity. This would make the lender give out the loan amount requested by the borrower. When taking the secured personal loan the borrower should take an amount that can be easily paid back. Besides this the person should also analyze his financial condition as to whether he would be able to make the payments towards the loan on time or not.

The secured personal loan should be taken carefully after assessing all the pros and cons of taking the loan. This is because of the fact that you are pledging you most valuable asset as collateral for the loan and you should also be aware of the fact that if you fail to make timely payments the lender has the full authority to take possession of your house. Hence you should look at all the options and see whether you can afford to take the secured personal loan and only after the assessment should apply for the loan. The secured personal loan can also be of help to people with bad credit as they would get a loan at lower interest rate and by making the payments towards the loan they would be able to improve their credit score.

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