Secured Personal Loan

As stated above a secured personal loan would normally be taken out only for a very large amount of money, which you would then need to repay over a long period of time. As the loan is for a large amount and the repayment period is a long one, the lender is incurring a potential risk that you might not be able to repay all of the loan. So the lender ‘secures’ their loan against something of value to you, to act as a guarantee for them that they can recover their outlay, if you default on the repayments. Perhaps the best example of a secure personal loan is a mortgage. The lender arranges for the finance of the property you want to buy. This will require a loan of hundreds of thousands of dollars that you will need to repay over 20 or 30 years. A mortgage lender typical ‘secures’ their loan against the property that you’re buying. This means that should you fail to repay all of the money – then the home you’ve been buying becomes the property of the mortgage lender. Secured personal loans are often only required if you need to borrow more than $50,000.

A secured loan can be obtained by offering personal property (e.g., a house, car or jewelry) as collateral. Basically, you will receive a loan amount that is based on the appraised value of the asset you provide as collateral. In this case, the lender performs an appraisal and then allows you to borrow up to a specific percentage of the item’s value. For loans such as home and auto loans, you will still be able to use the collateral in your day-to-day life. Should you default on the loan, the bank will be legally obligated to seize the collateral property and sell it in order to cover the outstanding remainder of the debt.

Secured Personal loans are the ones in which you place your property or car or any other valuable material such as jewelry as collateral with the lender, just like a home equity loan. If you are applying for a huge amount of loan, there are chances that the lender might not feel safe loaning you so much money with any security that he will get his money back with interest. This is the situation where at times the lenders themselves suggest these secured loans to be the best way to opt for such big loans.

However, by opting for these loans, the borrowers are not in for a loss. They have as much to gain from it as the lender. This is because the secured personal loans ensure its users a certain advantages and benefits such as flexible repayment schemes and comparatively lower interest rates.

Typical secured personal loans.

With secured loans being required when a large amount of money needs to be borrowed they are typically offered as mortgage loans or to people looking to finance a new business or develop an existing one. However, as we all know there are many other things that can be very expensive to fund; and are certainly beyond just using any savings we may already have. It might be you want to organize a terrific wedding, or ensure your child’s education fees throughout all their school years or perhaps take out a three or four year student loan deal. Apart from mortgage and business loans, any of those other examples would require loans on tens of thousands of dollars – which could mean that you have to agree to a secured personal loan to fund them.