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Advantages of Secured Personal Loans
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Advantages of Secured Personal Loans

A personal secured loan is a personal loan that is secured by an asset like a boat or a car. Such loans can offer many benefits, some of which are listed below:
Secured personal loans are loans that are offered to individuals rather than businesses.
Interest rates for this type of loan will generally be lower than for other unsecured loan products including bank overdrafts and credit cards. Therefore taking out an unsecured personal loan makes good financial sense. Such a loan can potentially offer significant cost savings.

Whenever we take out a secured loan we give a personal guarantee to the lender we choose that we are intending to repay our debt. This isn't just a question of signing an agreement and promising to do our best. We put our personal property as well as our credit rating behind our agreement. So, if we stop making repayments on our secured loan, the lender can simply take its money from our secured property. This, as you might imagine, presents less of a financial risk to the lender and that is why we get such good interest rates! Secured personal loans are normally quicker to arrange because the lender has some security to offset against the loan should you default on the repayments.

Other advantages of Secured personal Loans include:

  • They are easier to obtain than unsecured loans. The added security that this type of loan gives the lender means that even those with a less than perfect credit history can get hold of a Personal secured loan with relative ease.
     
  • They are generally offered with more favourable terms than other types of loans. With Personal secured loans it is also far more likely that you will be able to borrow a larger amount of money and pay it back over a longer period of time.
     
  • You are able to free up equity that would otherwise remain dormant in your property, letting you make use of capital that would otherwise remain unobtainable.
     
  • The interest rates are often considerably lower than those offered on unsecured loans. They will enable you to get your hands on money that would otherwise take a long time to save up, allowing you the freedom to spend it on whatever you want.
     
  • They can be used for any purpose such as; paying off debts, making home improvements, buying a new car, luxury holiday or anything you choose!

There are also some risks associated with a secured personal loan and you should be aware of these before proceeding.

Firstly, you should never borrow so much cash that your repayments in themselves are beyond your personal income. If you're unsure at how your finances will cope with the loan you need then talk to a loans specialist to get some advice.

Secondly, you should think about taking out some kind of payment protection insurance policy for your secured loan. Things can happen that stop us making repayments and managing our finances - with this sort of plan behind you you'll have no problems. It will, under certain circumstances, simply take over your repayments for you for a while.

There are two main things you should look out for with this type of loan. First of all you should always deal with a reputable lender that makes the whole loans process as easy as possible for you.

Then you need to take a long and hard look at costs. A loan is, at the end of the day, just a loan. You borrow a certain amount and then pay back more to make it worthwhile to the lender to give you the cash in the first place. The lower your interest rate, therefore, the less 'extra' cash you'll pay back.



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