What is a secured loan? A secured loan is a loan whre you are placing your property as security with the lender for the term of your secured loan. This demonstrates to the lender that you are committed to repaying the secured loan for the agreed term. Also the lender is in legal possession of your home until repayment of the secured loan.
The advantage of taking out a secured loan is that the interest rate offered is generally lower than that of an unsecured loan as the risk to the lender is lower.
The APR and term of your secured loan depends on your personal financial status and the your ability to repay the secured loan as perceived by the lender. Secured loans are therefore an extremely good way of raising finance for home owners who do not wish to sell their property in a financial crises.
Even if you have a bad credit history, in some cases it may be possible for you to take out a secured loan unlike a non homeowner.
Taking out a secured loan can seem an answer to all your financial problems but you must take care before applying.
Here are some important factors before applying for a secured loan:
Shop around to get quotes on the likely repayment cost
Check what the total interest payments will be over the term of the secured loan
Look into unemployment cover
Check if there are any repayment penalties and how they might apply to you
Thoroughly check print material for any points that you’re not aware of
Avoid taking out a secured loan longer than 10 years as your interest payment might end up being equal to the cost of the secured loan itself
Saturday, December 6, 2008
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