We take out loans from the market for various reasons. These loans and mortgages help us meet different needs. However, loans can be mainly of two types – secured loans and unsecured loans. Secured loans are those loans where you will have to pledge any of your assets as collateral and then get the funds. In case of unsecured loan, the lender will give you the funds depending upon your credit and income. No asset is required. Secured loans are considered better option as they are available at better terms and low interest rate. There are various ways in which you can secure your loan.
Making your loan secure
If you wish to go for a secured loan, you have various available options. Let’s take a look:
- Secure your loan with your home: Home loans or mortgages are the best form of secured loans. In this case, your home or the property will be considered as the collateral for the loan. You will get a loan or a mortgage depending upon the value of that property. Also, you should note here that you will not be able to get a mortgage which is equal to the 100% value of the property. You will have to provide 20% down payment to get the loan at http://thenetlend.co.uk . Banks, financial institutions, credit unions, local lenders, etc. will provide you with the mortgage against your home. You will be able to refinance your existing loan and you can even go for a home equity loan if you have equity in your property. Most people, who buy a property these days, take out a mortgage as the property prices are increasing on a daily basis. Mortgage loans are long term loans. Thus, you will be able to get loans for 15 years, 30 years or even 40 years.
- Auto loans: Auto loans are another form of secured loan. In this loan option, you will be able to get the loan funds by pledging your car or any other form of vehicle. This vehicle will act as the collateral for the loan. Depending upon the value of the vehicle, you will be able to get the loan. However, it should be noted here that vehicles lose value quickly. In such a situation, it will be better to pay off the auto loans as fast as possible. Moreover, in general, the auto loans are short term loans. Normally, you can pay off the auto loan within 5 years. However, you should check out whether or not any pre-payment penalty is mentioned on the loan.
- Secured credit card with CD: If you are trying to rebuild your credit, then you will also be able to get secured credit cards with CD. This will also be a type of secured loan. The credit limit on these secured cards will be the same amount as the Certificate of Deposit (CD). If you fail to pay off the debt, then the bank takes money that is available on the CD.
Secured loans are the best option available to those borrowers who have been rejected for an unsecured loan. However, you should remember that your asset will be jeopardized if you cannot pay off the loan.