| by Aldrich Chappel
As the name suggests, a secured loan is a loan given
to the borrower on a condition that he provides the
lender with something as a security to the loan amount.
Generally, the security offered is the borrowers
home. The property pledged as the security is called
collateral.
Secured loans are not risky for the lenders since they
have something from which they can recover their loan
amount, if the borrower fails to repay. For this reason,
secured loans are offered at lower interest rates than
the unsecured ones.
Secured loans are easier to get because of the
collateral offered. The ability to offer collateral
makes the secured loan accessible to a whole lot of
persons. People who are otherwise unable to prove their
creditworthiness can get a secured loan if they have
something to offer as collateral for the loan.
Secured loans can be taken for a wide variety of
purposes; in fact, any type of financial need can be
fulfilled via a secured loan. Debt consolidation is one
of the most popular reasons why people take a secured
loan.
Depending on the value of collateral offered the loan
amount can range from 00 to 000.
The lenders are not hesitant to offer a higher amount.
If they are satisfied that the collateral is of a
sufficiently high value, they can even consider lending
,000 or more.
The repayment options available with secured loans vary
with lenders. Generally, they are based on agreement
between the borrower and the lender. Repayment period
might range between three years to twenty five years. A
prepayment penalty may be charged if you repay the loan
earlier than the agreed period.
The process of getting a secured loan has many costs
associated with it. Since, collateral is under question,
the lender has to satisfy himself whether the value of
collateral is sufficiently high or not. If the
collateral is your home then he might have to get your
property valued and this will incur some valuation
charges. Solicitors fees to prepare the legal
agreement, the conveyance to the property site and
office charges are also included in the cost of getting
a secured loan.
The process of applying for secured loans is quite easy.
Nowadays, many lenders are having their own websites. A
borrower can submit an online application for such a
loan request. He can also submit his application over a
phone or into any of their offices.
The process of getting approval for a secured loan is a
little longer than the unsecured ones. The cause of the
delay is the valuation of the property or collateral.
The paperwork that has to be done in pledging the
collateral also takes time. Lenders will also take the
help of credit rating agencies to get a clear picture of
your credit history. All these formalities will be
completed within few weeks and you can hear about you
loan within 30 days of applying.
Every lending institution has a legal obligation to
inform you about the interest they will charge on your
loan. The APR (Annual Percentage Rate) is the most
suitable indicator of this factor. The APR charged from
you will depend upon your creditworthiness and equity in
the property. The borrower should try to get the loan
with lowest APR since it will help him pay the loan
easily.
Taking a loan is a legal process and brings financial
liability to the borrower. While taking a loan, a credit
agreement has to be signed; the terms and condition of
which are binding on both the borrower and the lender.
This fact itself should encourage the borrower to get
into the minutest details of the loan agreement and get
everything clear before signing on the dotted line.
About
the Author: Aldrich Chappel has been associated with
get-secured-loans,since its inception. He completed his
Masters in Finance from Lancaster University Management
School. To Find Secured loans,loans for homeowners, best
secured loans visit http://www.get-secured-loans.co.uk |
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