Secured Loans
Understanding secured loans
Secured loans differ from other forms of personal loans for the simple reason
that the borrowers home is offered to the lender, as security against the loan.
This is done for a number of reasons chiefly however the lender will require
this additional level of security in order to offset the risk that this type
of loan presents. Typically, secured loan applicants will be looking to borrow
larger amounts over longer periods of time than they would with a standard personal loan.
What advantages do secured loans offer?
By far and away the biggest and most attractive advantage of a secured loan is
the potential amount in which can be borrowed. Standard unsecured personal loan
packages are usually restricted to an advance of no more than £10,000 (although
a maximum of £25,000 maybe available through some selective lenders), secured
loans on the other hand carry far fewer risks than a personal loan (from the
lenders perspective) and are therefore privy to far higher advances (as much
as £500,000).
Secured loans also offer far longer repayment terms than a personal loan,
with some lenders offering a term that runs in tandem with that of a typical mortgage
i.e. 25 years. Most personal loan packages do not come anywhere near matching this,
with most lenders restricting their borrowing terms to around 5 years.
What can I use a secured loan for?
Secured loans can be used for almost any reasonable purpose (within the boundaries
of the law). Debt consolidation tends to be one of the most common uses of a secured
loan within the UK, and there are a number of reasons as to why this course of action makes sense: -
- Being able to borrow larger amounts means a person with many debts can consolidate
all of them through a secured loan.
- Stretching the term over a long period of time has the effect of reducing monthly
repayments (amount payable), therefore making debts more manageable.
- Secured loans can be sourced at very competitive rates meaning that through the
consolidation of a series of more expensive debts into one, cheaper rate loan, the
borrower can potentially save thousands.
In addition to consolidation, secured loans are also commonly used for home improvements
(such as extensions, renovations and home remodelling), holidays, new car purchases and
even cosmetic surgery.
What are the risks?
As a secured loan is tied to the borrowers home by way of a second charge,
the biggest risk presented with this type of loan is that failure to stick
to the terms of the agreement (meeting repayments dates on time and in full)
may result in the repossession of the borrowers home. For this reason, it is
extremely important for consumers to think long and hard before committing to a
secured loan, but more specifically, to be absolutely sure that they can comfortably
afford the repayments. Additionally, it is also important to know that home repossession
is only ever considered by a lender as a last resort and should not necessarily act as a
deterrent by default. Again, providing you have done your research, weighed up all of
the pro’s and con’s, and planned as much as possible for unforeseen events, there is
usually very little to worry about.
What features do secured loans from cheap loans offer?
We have a number of secured loan plans available to
cheap loans customers, typical features
of which can be defined as the following: -
- Cheap starting rates
- Quick in principle decision
- Fast track application process
- All employment traits considered
- Loans for any purpose
- Repayment breaks
- Terms from 5 - 25 years
- Loans from £5,000 to £250,000
- No Obligation quotation
- No application fees
- High acceptance rates
- More than 500 secured loan plans compared
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