Secured loans could be a solution for money problems.

Posted by maryparker on March 4th, 2013

People take secured loans for different reasons: whether to buy something (like real estate, or a dream car), or to go on a well deserved vacation, to make some home improvements or for debt consolidation. The money given by the bank after signing the contract of a secured loan can be used for various reasons and the client is not restricted to a specific use, as in the case of a mortgage.

But why take a secured loan and not an unsecured one? What are the differences between the two types, one might ask. Leaving aside the most important difference (the fact that you have to come up with a building or a house, an asset in general, used to secure your loan against), there are some other aspects to take into consideration, such as: secured loans come with a larger sum of money, a lower interest rate and a longer period of time for reimbursement. Usually the client has the possibility to choose whether he wants a longer or a shorter period, thus having a large or a small amount of money to pay every month, according to his needs.

Generally people are reluctant to taking secured loans because they are afraid they might end up without the property they secured the loan against, in the event of their impossibility of paying the debts. Yet, the bank is not interested in taking possession of your house, because, after all, a bank is not in the business of real estate. If, by any chance, your initial circumstances change and you can no longer pay the monthly sum, you must have an honest conversation with your lender and explain and give documented reason for your impossibility of payment. Usually both parts involved reach an agreement, situation in which we talk about debt consolidation. The bank comes up with a new loan, a larger sum of money for a longer period of time with a lower rate in order that the client should be able to pay.

Banks offer secured loans even to clients with debt records or late payments. After all, missing a monthly payment could happen to anyone. Maybe you didn’t have the money or simply forgot about the reimbursement date. As long as you use a property as collateral, your chances go higher. The bank has the guarantee that the client will do his best to fulfil his financial obligations in order not to have further problems.

People who are interested in debt consolidation or simply in getting a certain amount of money for their plans may approach a bank directly or they may reach for the help given by a broker agency. There are a lot of such agencies willing to help customers get the best offer from banks. Every client is unique and has a particular situation. Therefore he may get different offers from the banks. But in order to receive the most suitable solution for their problem, they have to go and discuss with each and every financial institution, which can be difficult, confusing and even tiring. That’s where a broker intervenes and presents you with the most appealing version of a secured loan.

Are you considering debt consolidation? Maybe secured loansare the answer to your problem.

Like it? Share it!


About the Author

Joined: November 17th, 2011
Articles Posted: 655

More by this author