Secured Loan Guide

Your Free Secured Loan Guide

What is a Secured Loan?

A secured loan, is one of several different types of loans a person can apply for. Most loans are either unsecured or secured. When you obtain a secured loan, it means that you are posting some form of property in place of that loan. Essentially, you are using something you own as collateral, just in case.

The best way to differentiate between the two types of loans is this way!

If you are asked to put up some form of collateral such as a home or property, you are getting a secured loan. If you are not asked for any form of collateral, then it is an unsecured loan. Now, in some cases, you are looking for a secured loan on a piece of property or home that already has a loan, in this case, you are seeking a second mortgage or a second charge.

What is the Difference Between a Secured Loan and an Unsecured Loan?

Aside from the obvious difference of having to secure the loan with a piece of collateral in the case of a secured loan, there are many differences. Let us have a closer look at the two specific types of loans to help you better decide if a secured loan is ideal for you:

About Secured Loans - Secured Loan Guide

With a secured loan, the amount of the loan will be no more than the value of the property in most cases. In many cases, it may even be slightly less than the actual value of the property. It really depends on how much you want to borrow and what you want to borrow the money for. Some lenders, after evaluating your current financial situation may even offer you 125% of the property's value as a loan.

Most secured loans start at a minimum of ₤3,000 and can go as much as ₤100,000 depending upon the lender, the property, and the reason behind the loan.

Another advantage to the secured loan is the fact that the interest rates will likely be slightly lower than other types of loans, simply because you are putting up some form of collateral. However, there are many different elements that go into determining your interest rates.

For example, your credit report, your credit score, your income, your current debts, and how much money you are borrowing will greatly affect the interest rate you receive.

The downside of this type of loan is the fact that if you default on your payments, your property can become the property of the lender. This is the idea behind the collateral. They have the opportunity to get back the money or at least most of the money that they have lent through the sale of your property if you should fail to make payments.

About Unsecured Loans - Secured Loan Guide

Unsecured loans are just as they sound. They do not require any form of collateral, but are harder to get. In order to get this kind of loan, you have to have as close to perfect credit as one person can get. Because the bank has no guarantees of getting their money back via sale of property, they have to go by your word and your history as their guarantee.

This kind of loan also may carry a higher rate of interest than other types depending on your risk factors. If you have any troubles with your credit at all, the best chance you have of borrowing money is to go with a secured loan if you have some form of collateral.

Choosing The Right Loan For You?

So, how do you decide which loan is right for you. Well, first you have to determine where you stand financially. You have to look at your financial situation in the same light that the lenders will look at it. The best thing for you to do is to get a copy of your credit report.

This is very easy to do and while it may cost you a small amount of money to obtain, it is far worth it in the long run. With your credit report, you will likely get your credit score as well. It is important to look over the report and identify any errors there may be. If there are errors, you can contact the reporting agency with proof of the errors and they will correct them if indeed your proof is valid.

Knowing where your credit stands is an important element to knowing which type of loan you can get. Remember, secured loans are best because they are a little more lenient on the credit rating than they would be with an unsecured loan.

Protecting Yourself - Secured Loan Guide

Before you sign on the dotted line for a secured loan, you have to make sure that you understand every element of the contract, the loan, and so forth. Never sign anything that you have not read completely and have a full understanding of. If there were any elements stated by the lender, be sure that they are stated within the document you sign as well.

If you have any questions, you should not hesitate to ask them before you signing. Now one thing you should understand about secured loans is the law. Under the 1974 Consumer Credit Act, secured loans have to abide by certain regulations when it comes to lending. This act only provides regulations for loans of up to £25,000. Under the regulated secured loans, you have a seven day period of consideration.

At the same time, you might want to ask about other offerings provided by the lender. They may offer insurance for you and your loans. This could mean protection during sickness, death, unemployment, or accident. These insurance policies offer protection of your payments during these periods. In some cases, will delay payments or make the payments for you.

It is important to ask your lender about these things and determine how much they cost, what they cover, and what conditions might apply to them.

Now that you understand a little more about secured loans from our secured loan guide, you can apply for one knowing what you are looking for and what to expect.

We hope this secured loan guide was helpful to you and your needs as a UK homeowner. The purpose of this secured loan guide was indeed to help you understand secured loans and their many purposes. Please feel free to contact us to leave your feedback.

Return to the homepage from this secured loan guide.

Best Articles

Equity Loans: Leasing Your Equity
Understanding equity and leaning how to release it safely with lenders.
Read More...

Consolidation Loans - Get Rid of Unwanted Debt
This article will help you understand consolidation loans for debt consolidation purposes.
Read More...

The Advantages for Homeowners Looking for a Loan
If your a homeowner it can be very easy for you to get approval for your loan.
Read More...

News | Terms |Privacy Policy |Contact Us |Links |Sitemap |XML

(THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.)