secured Loans

Secured Loans

Secured Loans for uk borrowers
Secured Loans

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UK Finances and Loans » Secured Loans

Secured Loans

Secured Loans are loans provided to you by finance companies on the basis that some valuable belongings or property is used as a security for the loan. For example if a loan is secured on your home, then the lender will give you some money using your house as a guarantee. If you can not re-pay the loan the lender can take posession of your home and sell it to get back the money they lent you.

Secured loans are offered by lenders against collateral which acts as a security if the borrower is unable to repay the loan amount. Capital high-value assets such as homes are usually offered as collateral. The valuation of the asset is determined by the lender to calculate the loan amount which is advanced to the borrower. The ownership rights being transferred to the lender does not mean a loss of the pledged asset to the borrower. However, the lender can initiate a foreclosure if the borrower is found to be defaulting on payments on a consistent basis. Since lenders are assured of repayment due to the lien, they are willing to offer loans at lower interest rates.

Secured loans offer more flexibility to borrowers in terms of repayment. Typically, after the approval of the secured loan, the lender breaks up the cost of secured loan into small amounts which are affordable to the borrower. These small monthly payable amounts include two elements - the interest rate, and a small part of the loan. This ensures that the debt goes on decreasing with each payment, without too much burden to the borrower. Another repayment option offered by the lenders is through the interest-only secured loan. In this case the borrower needs to pay only the interest and the actual loan amount can be paid as a lump-sum amount. A third option for the borrower is to make early repayment of the secured loan, and thus get free from debts faster. Whilst some lenders may offer a discount, others may charge a penalty for early repayment.

Although credit ratings of the borrower are taken into consideration, an imperfect credit score does not largely affect the approval of the secured loan. The reason being, that since the lender always offers a loan amount which is lower than the collateral value, he can liquidate the collateral in case of default and recover his money. Cases of low credit scores such as CCJs (County Court Claims and County Court Judgments), IVAs (Individual Voluntary Arrangements) and self-employed individuals, are also offered secured loans by lenders.

It is always advisable to seek an expert for guidance before entering into a loan. A borrower can opt for loan protection, together with the secured loan, which will guarantee repayment of the loan amount under any circumstances.

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UK Finances and Loans does not represent any particular loans or finance company. When requesting a loan from any of the online loans or finance companies listed you are dealing directly with the loans or finance company. We are not responsible for the transaction or any problems with applications or loans arranged through any of the online loans or finance companies listed on this site.

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