Tips to Receiving a Secured Personal Loan by:Paul Rogers
A secured personal loan is a loan that uses a borrower's property as collateral
. Typically the collateral is a home, but it can also be a vehicle, stocks or shares. The lender will treat the property as security for the amount of the loan. If the property that is used as collateral is mortgaged, it is known as a second charge, while a home that is owned by the borrower is considered a first charge.
Potential borrowers have several options when applying for a secured personal loan. They may apply in person at the lending institution, over the telephone, with a written application, or online using the lending institution's website. Other online companies may offer loan services as well, so it pays to shop around. In applying, consumers need to be certain of their economic and credit status, as these will be evaluated when determining whether they are eligible for a secured personal loan.
How to determine the amount financed
The amount that a lender will offer a borrower is typically proportional to the equity that is present in the collateral. Therefore, the higher the value of the equity, the higher the amount the secured personal loan will be. Because the collateral is property of the borrower, there is less a risk of default compared to an unsecured personal loan and as a result, the borrower has the advantage of securing lower interest rates than people who opt for unsecured loans.
What to do with the secured personal loan
One of the most common uses of a secured personal loan is debt or loan consolidation. This allows the borrower to use the secured personal loan to pay off accumulated debt, which will then leave them with only one loan payment that is lower than the other payments added together. This is possible due to a difference in interest rate or repayment schedule. Secured personal loans can be used to consolidate credit card debt, unsecured loans, or other secured loans, or they can serve to pay for additional expenses such as buying a new car, taking holiday, or paying for educational expenses.
When shopping for a secured personal loan some questions to ask the lending institution include: Will I have to pay any fees?; Can I apply if I am self-employed?; Can I apply if I have a County Court Judgement or a bad credit record?; Can I borrow more at a later date?; What happens if I pay the loan off before agreed deadline?; Can I extend the period of my loan?; How long will it take to process my loan?; Is my application confidential?; Are there restrictions on how I can spend the money?
About the author
Paul Rogers writes general finance and loan articles for the Loans UK Online website at
http://www.loansukonline.co.ukhttp://www.articlecity.com/articles/business_and_finance/article_9521.shtml
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