Secured Loans: Protection Guaranteed

2007-03-08 10:33:40

( Financial )



Borrowing money is a very common practice in our society. Such borrowings are used in many ways, mostly for emergencies when there are unexpected expenses, or for used as capital in a business.

Whatever the reason is, there are a lot of financial institutions willing to lend you money provided that you have good credit standing. If you really need that capital, a good way to increase your chances of getting your loan approved is to apply for a secured loan.

Give and take

Secured loans are loans taken out against your property or assets. The money the bank lends you is backed by a collateral. This collateral may be in the form of real estate, vehicles, jewelry, bonds, and other assets that can be liquidated. They give you the money you need in exchange for the right to sequester your assets. In secured loans, the lending company may seize the collateral you have put up in case you cannot pay your dues for a certain period of time.

If you take out a secured loan, the money that is lent to you is based on the value of your collateral. Secured loan rates are usually lower than unsecured loan rates because a secured loan presents lower risks for the lending entity. Be wary though of those offering very cheap secured loan rates as they may be stricter in terms of payments and may seize your collateral for just a few months’ arrears.

The best secured loans are those from companies that give reasonable interest and some breathing space in cases where you may fail to make the payments. They should be willing to grant concessions or enter into settlements whenever offered.

Secure yourself

Do not worry, just because you owe a company money does not mean that they can drive you to bankruptcy. There are debt consolidation secured loan programs that you can avail of to help free you from debt.

Always read the fine print and know your rights under the law. Secured loans or not, you are protected more than you think you are.


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