Secured Personal Loans
What Are Secured Personal Loans?
Secured personal loans are loans that are secured against an asset, which is usually your home. If you were unable to pay the loan back, the lender could force you to sell your home in order to recoup some of the money. There are many reasons why people take out secured loans. They may want to renovate their home which can potentially cost a lot of money. People also choose secured loans to pay off all their existing loans and credit cards so that their monthly payments are reduced. Read More >>
What Are The Advantages Of Secured Loans?
There are several advantages that secured loans have over unsecured loans.
They are often easier to get. As the loan is secured on your home, lenders will generally feel more confident about granting a loan. This is because it is easier for them to get their money back. This is particularly useful for people with a low credit rating that may struggle to get a loan from elsewhere.
You can borrow larger amounts. Secured Personal loans tend to be for larger amounts than an unsecured personal loan. This is why many people use them for work that they want to be done around the house.
You can borrow over a longer period. There are usually quite high set up costs when arranging a secured loan and therefore the loans will be offered over a longer period in order to keep the monthly payment lower.
What Do You Need To Be Aware Of?
The main thing that you need to be aware of with a secured personal loan is that your home is at risk if you are not able to keep up with the repayments. This means that you will have to think carefully about whether the loan is affordable. You will also need to consider what would happen if you have a change in circumstances. Maybe a work related occurance that reduces your income. As the loan would still need to be paid.
Another thing to be aware of is that as the secured loan is taken over a longer period. The total amount of interest that you pay would be a lot higher than that of an unsecured loan. The cost of this interest can be reduced if you are able to overpay on your loan and this will also reduce the length of your loan.
How Do You Apply For Secured Personal Loans?
The actual application process will vary between lenders. But there are likely to be certain aspects that will be the same across all lenders. Before you apply for a loan there are certain things that you can do. This can make the application process easier for yourself and the lender.
You are going to be asked questions about your income and outgoings. So it is a good idea to find paperwork that can prove these such as utility bills and wage slips. A budget that shows exactly what you have coming in and going out can also be very useful. Lenders will want to see that you are going to be able to afford the repayments and so you should be prepared to answer a lot of questions about your finances.
How does my credit rating affect application?
Although a perfect credit score may not be needed to get a secured loan, the lender will still perform a credit check. Therefore it is a good idea to check your credit report to see if there are any mistakes on there which could prevent your loan being granted.
Some lenders will let you start the application process online, but at some point, they are going to have to speak to you directly. This can usually be done over the telephone. This conversation will allow them to get a better idea of your circumstances. They can also ask for any other information that they need in order to process your application. They will also want information about what you are going to use the loan for and details of your property and current mortgage.
The information that the lender gets from this conversation should be enough for them to make a decision. The time that it takes to inform you of this decision will depend on the lender. However once you have been approved you should not have to wait too long for the money to be deposited into your account.