As the name suggests, secured loans are the loans where the lenders assure that they have some assets of the borrower with them. The loan agreement is made in such a way that the holder reserves the right to sell the asset of the borrower to recover the disbursed amount in case the borrower fails to repay the loan. The security or the collateral is generally an asset with a higher equity or somewhere close to the value of the loan. Such loans are great if the borrower has a fixed income or a source of income. These aim at a lower rate of interest and better repayment terms. Lenders are in a position to offer the customers attractive offers as they know that their money is secure and thereby attract such customers for better earnings.
Is Debt Consolidation Really Helpful?
If you are amongst those who has piled up a huge amount of debts and are now in a state of affairs where you are unable to repay the loan, secured loans can be a better option to get some help. One can borrow a larger sum of money with the secured loan. The loan amount could be used to repay the different debts in one go. One is then left with one larger loan to be repaid. An easy solution provided one has enough sources to regularly repay the new loan. In case, one gets into a situation where one unable to repay the new loan , it could be dangerous the security or the collateral could be lost.
This debt consolidation whether by self or with the help of a debt consolidation service provider, the aim is basically to get rid of the numerous debts in a shot and enter into a new repayment plan.
What are the factors affecting the monthly payments on the secured loans?
The repayment amount is dependent on a number of factors like:
3-Current rate of interest
Are The Secured Loans Easily Accessible?
Lenders get an assurance that the amount of money they are lending to the borrower can be easily recovered by selling of the assets or the collaterals as per the agreement terms. It is because of these reasons that the secured loans are easily accessible and at the best rates of interests and terms.
These loans are best suited to the self-employed personnel who can easily get the required funds against the asset as collateral. However, if they go for an unsecured loan it will be difficult to accrue the same.
Are there any restrictions on the use of the secured loan amount?
Loan amount received under the secured loan can be used for any purpose the borrower wishes.