Different Types of Secured Loans

Secured Loans – Secured Debt Consolidation Loan

secured loansSecured loans are the type of loans wherein a borrower pledges an asset against the money being borrowed. It is the easiest loan to obtain because it reduces the risk the lender has to take against the loan. The asset used as collateral is automatically obtained by the creditor in cases of default, then it is sold to cover their loss.

Secured loans are classified according to their usage. For example, there is the secured debt consolidation loan wherein you are given an opportunity to manager all your loans by consolidating them into a single loan. There is usually a substantial amount of money needed to obtain this kind of loan, that’s why most financial institutions opt to have it secured.

Secured Loans – Bad Credit Secured Loans

There is also bad credit secured loans. One’s poor credit score limits his ability to obtain a loan with a low interest rate and good payment scheme. But if he has a property to present to secure the loan, banks are often more willing to extend credit without any hassle.

One can also obtain a secured wedding loan, car loan, unemployment loan, holiday loan, home improvement loan or business loan. They differ on their specific usage while having the same way of obtaining them, which is through the security of the asset being presented against the loan; therefore, having the same application and approval process and almost the same terms and conditions.

Qualifications Of Secured Loans

The most common qualifications of secured loans are the home equity loan or second mortgage. The borrower’s home is automatically used as collateral to guarantee timely payments. Banks base the loan against the value of the property less the amount still owed from the first lender. Having the borrower’s home as collateral presents less risk to the bank than to the borrower. This is because the bank still gets the loan paid while the risks losing his home in case of default.

Whatever your lending need is, providing a property to secure against the loan will make it easier for you to get approved. Different types of secured loans are offered by all financial institution, therefore giving you a lot of options to choose from. However, be sure to review different offers first before finally deciding to submit your application.

Secured Loans