Secured Loans - What Are The Benefits?
There are a number of benefits to taking out secured loans as
opposed to unsecured loans. First of all, if you are a home
owner and have the ability to offer security to a bank or other
lender, then you will have a much better chance of getting
credit. Lenders are always very worried about risk, and the
biggest risk from their point of view, is that you will be
unable to pay back the loan. Therefore, if you have provided
them with some form of security, then they will be far more
willing to lend to you.
Your Credit History
This is true even if you do not have a perfect credit history.
The fact of the matter is that lenders will be willing to
overlook your poor credit history simply because you have the
ability to provide them with security against the loan.
More Available Capital
Another advantage of secured loans is that you will typically be
able to borrow far more than on a secured basis. Most people
will have a couple of thousand pounds in unsecured debt, usually
from bank overdrafts, credit cards and perhaps student debt.
Other than this, if you need to borrow larger sums, you will
pretty much require security. And the value of the property that
you have to secure loans against will set the limit to how much
you can borrow.
Less Risk Involved
Because a secured loan carries far less risk for the lender,
they will be willing to offer you far more attractive terms and
conditions regarding the loan. So even though you are borrowing
far more money, and require a much longer time for paying it
back, you will have lower interest rates, less severe penalty
charges and generally speaking, a more generous loan agreement.
Conditions of a Secured Loan
There are conditions attached to secured loans however. First of
all, you must be a home owner in order to qualify. If you do not
own your own home, you will not be able to offer the bank
security and will not qualify for these loans. There is also the
fact, that should always be borne in mind, that securing a loan
over your home places your home at risk. If for some reason you
become unable to keep up with repayments, then the lender will
have a right to take possession of your home and sell it in
order to recover the amount borrowed. Therefore, you should
consider carefully if you can afford a loan before taking it
out.