What is secured loan and how is it helpful to us?
Yes, this is a most effective loan which is very helpful and has many benefits to be considered. If an individual who is seeking for loan pledges for some asset like car or property instead of taking loan from creditor then it can be passed to borrower. This asset becomes secured debt instead of loan given to borrower. If in case the borrower is unable to pay back the taken amount, then the creditor has right to sell it to gain back some or all of the amount initially loaned to the borrower, for example, foreclosure of a home. Sometimes when creditor’s are unable to take back the exact amount from borrower by selling the debt, thus in that case they often obtain a deficiency judgment against the borrower for the remaining amount to get back. This type of loan is also known as homeowner loans or second charge mortgages in other words.
Advantage’s of this specific loan you should know:-
There are many who feel that below mentioned advantages are really true while applying for secured loan and it will really give benefits.
· A perfect credit rating is not actually required for this type of loan:- All the lenders firstly check for your credit rating and if it is not perfect, instead it is less than perfect then you might struggle to borrow loan from personal loan or other. Thus due to secured loan being backed by property, the lender may be willing to look at riskier borrower’s. Thus it is very important to take care about your credit rating because the worse will be your credit rating, the more will increase your interest rate. And if lender notices that your credit rating is very much poor then you will not be getting any secured loan.
· Rates can be probably low:- The most perfect good news for borrower is interest rates are low thus tension could be lesser. According to news, secured loans have become cheapest and are now at around the 8.5% mark. Rates have certainly become a lot cheaper than compared to payday or guarantor loans.
· You receive long repayment periods:- Talking about repayment periods then secured loans are best to take as it contains ling repayment periods which lasts for ten years or even more than that. That’s the reason why you are able to pay off the debt due to plenty of time. But you should know one more thing that the longer you time you will take to pay off the loan, the more interest you will have to pay for it.
· Recommended as best loan than compared to other unsecured loan as here you are getting enough time and you will not have to face many trouble than you are going to face in unsecured loan.
Secured loan can prove to be the best loan though it contains some disadvantages but is best than unsecured loan so if you are planning to take loan keep in mind some essential points needed before applying for it.