Signing Up For a Secured Loan

There are many reasons for taking out a secured loan: reconstruction on your house, a large purchase, unexpected bills (hospital, funeral and wedding) or even just treating yourself to a well-earned holiday. While unsecured loans don't need you to be a homeowner, secured do- because it's usually a longer repayment time and a much larger amount of money than you can get with an unsecured. If you're thinking about getting a secured loan (also known as a 'personal' loan), there are several points to be aware of.

You'll need to know your credit history, or credit score, before you go in. You've a greater chance at getting approved for the amount you want if your history is good. Even if you have a bad credit history, though, you can still qualify- because you own property. Lenders are taking less risk with you because if you don't keep up with your repayments, they can take your property in payment.

Budget how much you can pay monthly, including debts, earnings, spending and how much interest you can afford. The marketplace is pretty competitive right now, which means even lower interest rates than before. You could wind up paying more or less than the 'typical' APR (which is 66% on average) because of your credit history, how much you want to borrow and what time-frame you're looking at paying the loan back. Secured loans can be from 3 to 25-year terms.

When you start getting quotes, you'll need to look at all of the details in the small print. You can be charged extra for paying the loan off too early, or have fees for services that are added into the total loan. You should also consider taking out payment protection insurance, which will protect you in case you lose your job or have problems with your monthly payments. These agreements need to be looked at carefully, also, for exclusions or exceptions. And the amount will have to be included in your monthly expenses.

Sarah Conner

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