Secured Loans - What to Consider

Homeowners are a step ahead in acquiring loans, because they can qualify for both unsecured and secured loans. If you're looking for a larger amount of money and you own a house or property, then a secured loan might be your best choice. You can use the money for repairing your house, a new car, consolidating your debts or unexpected expenses like medical or a wedding. There are many considerations when going into a secured loan. Here are the basics:

The amount you want to borrow, how long you want your repayment period to last (it's usually between 3-25 years), your credit history and the value of your home will all be part of how much the lender will be willing to give you. The purpose of the money can also be a factor.

Thanks to a very competitive market, the interest rates are falling steadily. But beware the quote of a 'typical' APR, because only roughly 66% of borrowers fall into that category. The others could have a higher or lower amount. It depends on how the creditor evaluates your risk base.

Though the interest rates are lower than an unsecured loan, there are a few possible negatives for a secured loan, the most important of which is falling behind on your payments and getting your property repossessed. The reason the lender can charge such little interest is because of the guarantee if you can't make the monthly payments.

You can get payment protection insurance, for an extra monthly fee, to help shield you from repossession. If you decide on insurance be sure to fully research all of your options before buying. Costs and coverage vary from company to company.

Do a budget before shopping around for a secured loan, to see what you can and can't afford. You can get a lot of free quotes either from a bank or from an on-line lender, but you need to read everything in the offers. There could be fees or terms that will cost you much more by the time you pay the loan off.

Sarah Conner

Sarah Conner is Financial Consultant for Chums Finance UK, Please visit the best option for Secured Loans, Unsecured Loans.