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 borrower's 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 loans. Depending on the value
of collateral offered the loan amount can range from £3,000 to £50,000. 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
£100,000 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. Solicitor's 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.Having completed his Masters in Finance from Lancaster University
Management School,he undertook to provide useful advice through his articles
that have been found very useful by the residents of the UK.To Find Secured
loans,loans for homeowners,best secured loans visit http://www.get-secured-loans.co.uk
