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Frequently Asked Questions about 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.

        

What is a secured loan?

Described simply asecured loan is any loan with which the loan provider demands the applicant to provide some type of guarantee that the loan will be paid back; this is frequently in the form of an applicants home, however could be any asset worth more than the amount borrowed.Secured loans are normally for larger sums of money and the applicants home or asset can be repossessed if the loan is not paid back: because of this it is usually just homeowners who are eligible to apply for secured loansas few people own assets equal to the amount they wish to borrow other than a property.

Why should I take out a secured loan?

Secured loans can provide an alternative to remortgaging your home and regularly offer lower interest rates and higher borrowing amounts than unsecured loans, making them an attractive and cost effective money solution. A Secured Loan can also regularly offer a longer repayment period than most other types of personal loans; a lengthier repayment period can often mean monthly repayments are more manageable.

What information do I need to provide to apply for a Secured Loan?

When applying for a secured loan your loan provider may require additional information from you such as proof of income or proof of address. Every application is different so you will be informed what information is expected for your individual application.

How long will it take to process my application?

The processing periodfor your Secured Loan can vary from provider to provider, but most lenders will try to keep you informed throughout the application process. All lenders have to abide by the Consumer Credit Act, which regulatessecured loans along with other types of borrowing; all lenders are required to inform you of a deadline by which your application will have been considered; this period can last up to 16 days.

How much can I borrow, and how long would I have to repay it?

Each Secured Loanlender will offer different repayment periods, however most secured loan providers are able to lend any amount between 1,000 and 250,000, subject to your personal circumstances, and repay it over a term from 12 to 300 months. The value of your property and your credit history are commonly the factors that have the most influence over how much and how long you will be permitted to borrow funds for.

What can I use a Secured Loan for?

Secured loans cans be used for anything you want really; some common used include debt consolidation, home improvements, or to finance the trip of a lifetime. Many applicants wish to use their Secured Loan to help their children with university fees or weddings or that much-needed new car.

Who can apply for a Secured Loan?

Anyone! The only requirements of a Secured Loan is that you are over 18 and own your own property, some Secured Loan providers 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.

How do I apply for a secured loan?

The simplest way to apply for a Secured Loan is online by using a loan comparison site to do the leg-work for you; this works with the comparison asking details questions about your requirements and will compare all the option available to you, sorting them in order of relevance to the information you provided.

How much interest will I end up paying?

Interest rates will vary from lender to lender and will also depend on your circumstances; it is important to remember that the interest rate advertised may not be the interest rate applied to your loan. Providers advertise their best rates, however these only have to be available to 51% of approved applicants, and these rates will be given to the applicants with the most desirable credit histories and most valuable assets. The majority of Secured Loans have 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.

What happens if I experience financial difficulty?

In the event of a change in your financial circumstances, it is best to immediately inform you loan provider to discuss your options, most lenders do not wish to repossess your property as frequently they do not recoup the full amount, this means they more often than not want to help you come to a workable solution. Loan providers will, in cases of genuine hardship, exercise forbearance, which means that they may relax the terms of the agreement for a temporary period.

What will happen if I do not repay my loan?

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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