|
Finding the Best Secured Loan for Your Money
Written by: John Mussi
If you're looking for a secured loan, there are several options available to you. Most banks and finance companies will issue a secured loan to people with good or bad credit. since the loan is secured, there is a much lower chance of them losing their money if the borrower is unable to repay the loan.
Let's take a closer look at secured loans, examining how they work and some of the different types of loans available from different lenders.
A matter of collateral
A secured loan is referred to as "secured" because it has an object (known as collateral) offering security to the lender in the form of a guarantee that they will get their money back even if the borrower doesn't repay it.
This security enables lenders to offer a secured loan to a wide variety of individuals, even if they have less than perfect credit.
Traditional loans
Traditionally, a secured loan is offered by a bank or finance company to allow individuals to purchase specific items, to pay bills, or to repay old debts.
The bank or finance company will require specific collateral depending upon the intended use of the secured loan. some items, such as houses or automobiles, serve as their own collateral, whereas some other uses of secured loans (such as debt consolidation) require additional collateral which is usually worth more than the loan amount.
These loans can have quite varied terms. auto loans are traditionally for five years, whereas a house loan (also known as a mortgage) may last for 20 years or more. Some smaller loans may even have a turn of six months to a year.
While the loan is being repaid, the bank or lender charges interest on the remaining amount, with interest rates that are agreed to when the loan agreement is signed.
Online loans
An alternative method of applying for a secured loan has been growing in popularity for several years, and shows little sign of stopping. taking full advantage of the digital age, online lending companies provide the loans that people need with the convenience of researching and applying for the loan from the comfort and privacy of home.
Online loans, like traditional loans, tend to require collateral. with most online loans the collateral is usually either related to the loan or is an object with an exceptional resale value.
The most common online loans are homeowner loans, in which the equity of the owner's house serves as collateral; with sufficient equity, even individuals with bad credit can get the loans that they need without the extreme interest rates of some traditional lenders.
You may freely reprint this article provided the following author's biography (including the live URL link) remains intact:
About the Author
John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the www.directonlineloans.co.uk website.
Warning: date(): It is not safe to rely on the system's timezone settings. You are *required* to use the date.timezone setting or the date_default_timezone_set() function. In case you used any of those methods and you are still getting this warning, you most likely misspelled the timezone identifier. We selected the timezone 'UTC' for now, but please set date.timezone to select your timezone. in /home/rliu008/public_html/redhotloantips.com/rotator.php on line 7
Warning: date(): It is not safe to rely on the system's timezone settings. You are *required* to use the date.timezone setting or the date_default_timezone_set() function. In case you used any of those methods and you are still getting this warning, you most likely misspelled the timezone identifier. We selected the timezone 'UTC' for now, but please set date.timezone to select your timezone. in /home/rliu008/public_html/redhotloantips.com/rotator.php on line 7
Home Equity Loans 101
A secured home loan differs from an unsecured loan in that the secured loan borrows against one's home as collateral, thereby reducing the risk to the lender. As such, secured home loans often offer better interest rates than unsecured loans, but... read more
Business Loans for Women
The Small Business Administration states that business loans for
women are on the rise, and will continue to be needed on an
increasing basis in coming years. Business loans for women are
more popular than ever due to a variety of factors.
... read more
Refi Home Mortgage Loans - How Soon Can You Refinance An Adjustable Rate Mortgage?
Homebuyers have several loan options. Hence, purchasing a new
home has never been easier. Individuals who cannot afford a down
payment or closing costs may take advantage of loan programs
that offer assistance. Furthermore, those hoping to obtain... read more
Return to Home
|
