Top Tips for Dealing with Secured Loans

This article will help explain exactly what is mean by a secured loan as well as detail all that is entailed when applying to a secured loan provider.

        

Tip 1: Know what you're dealing with

A secured loan is any borrowed amount where the lender asks the applicant to provide some a deposit to ensure that the loan will be repaid; this is commonly the applicants home, this is why a secured loan is often referred to as a home owners loan.Secured loans are commonly for sums of money larger than that available through other loan options such as an unsecured loan, it is for this reason that a sizeable asset such as a property is required as a guarantee of repayment.

Tip 2: Know the advantages

Remortgaging your home can be expensive and take time, a Secured loan can prove to be an affordable and quick alternative. Due to their relatively low risk to the lender Secured Loans can regularly offer lower interest rates and larger borrowing sums than other methods of borrowing, making them an attractive and cost efficient source of finance. A Secured Loan can also regularly offer a longer repayment time-frames than several other types of personal loans; an extended window of time to repay the borrowing can make paying back the loan a little bit more manageable.

Tip 3: Do your homework

You may have to provide several pieces of information that your loan providers feel is pertinent to the approval or denial of a your Secured Loan. It is for this reason you should be prepared to supply information such as proof of income through wage slips or tax documents or proof of address through household bills or in date passport or drivers permit. Having this information on hand may speed up the application process and result in the desired funds being released quicker; just remember every application is different so you will be informed what information is expected for your individual application.

Tip 4: Be prepared to wait!

Processing periodsfor any financial product can vary from lender to lender, but most loan providers will give regular updates throughout the application process. Most lenders with provide you with a date by which a decision on your application will have be made, this again can vary, ranging between 8 and 20 days, if you own your home with someone else your application may take longer as the loan provider will have to check the information of each applicant separately, so be prepared to wait. If time is of the essence you may find a payday loan or unsecured loan more suitable for your needs, however both of these options offer lower loan amounts than a Secured Loan.

Tip 5: Know how much you need!

Secured Loanproviders all advertise different loan amounts, in general Secured Loan providers are usually willing to lend any sum ranging from a few thousand dollars up to a quarter of a million dollars, dependent on you personal situation, and repay it over a term of 12 to 300 months dependent on your loan agreement. Your homes value and your credit history will ultimately determine how much you will be permitted to borrow and over what length of term.

Tip 6: Don't borrow for the sake of borrowing...

Secured Loans although cost effective in comparison to other forms of borrowing is still borrowing and still comes with all the fees and interest rates commonly associated with loans. Secured loans cans be used for anything you want really; some common uses include debt consolidation, home improvements, or to finance the trip of a lifetime. However it is important to only borrow what you need, as interest is charged on the full amount borrowed even if you do not spend the full amount you will still incur interest on it.

Tip 7: Make sure you meet requirements

Although Secured Loans are generally quite accessible there are still requirements, its important to make sure you meet the requirements before applying, this will save you time and save disappointment if the application is denied. If you do not meet the criteria there is no need to panic, there are several other means of borrowing which may suit your needs better. The only requirements of a Secured Loan is that you are over 21 and are a homeowner, some Secured Loan lenders also have a maximum age limit however this usually dependent on your income and any existing financial obligations. However, if you jointly own your property then you will need to make a joint application.

Tip 8: Know where to start!

Online comparison sites are the best way to get started on your loan application as they do all the hard work for you. Comparison sites work by asking for information from you and using the information to filter down thousands of Secured Loan options down to just those that fit your requirements, they also usually list them in order of relevance to the search criteria, meaning the best match is usually at the top, however it's always worth having a look around as requirements can often change once you see what's available.

Tip 9: Know what you're paying

Interest rates will vary between different loan providers, your personal circumstances will also influence how much interest you end up paying; it is important to remember that the lenders only advertise their best rates, it does not always mean you will be eligible for the advertised APR. These rates only have to be available to 51% of approved applicants.

Secured Loansfrequently come with variable interest rates. This means that the payments may fluctuate during the term of the loan. If your secured loan lender increases the interest rate on your loan then your payments will increase. This should be a consideration when budgeting for the repayments of your loan.

Tip 10: Know the consequences

We all know unforeseen situations can crop up, if this occurs it is best to inform your loan provider immediately. Repossession of your home is always a last resort for loan providers and this will usually exhaust all other viable option first. Informing your loan provider will give them time to arrange an alternative method of repayment or even a freeze on repayments unit you are in a better situation.

A secured loan is in essence a second mortgage and it is essential that you keep up with repayments; otherwise you risk losing your home. In extreme cases your loan provider is entitled to repossess your home and sell it at auction to recoup costs.

        


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