Pros & Cons of Secured Loans

A secured loan is one that uses the assets (belongings) of the borrower to ensure the repayment of the loan. In borrowing money against, for example, your home or car, the lender has less risk of you reneging on your commitment to repay. Should you fail to repay the loan or have too many delays in payments, the lender has the contractual right to your property. That ’s right, they own your belongings until you repay the full amount of the loan and interest.

Getting a secured loan is a great idea when you:

1. Have bad credit and cannot get an unsecured loan
2. Have a bad credit history
3. For whatever reason you are unable to be approved for an unsecured loan

Pros & Cons of a Secured Loans

• Fast approval based on your property ownership
• Lower interest rate
• Borrow at the value of your property
• Extended period for repayment

• You are at risk of losing your property
• Having to pay back the loan

source : http://www.loansnmortgages.co.uk

Secured versus Unsecured Loans

Secured loans are backed by personal property, usually a home. A secured loan can be made against a home whether it is under mortgage or owned outright. The amount of the loan can depend on a number of factors, particularly how much the owner owes on the property in comparison to the value of the property. The larger this difference, the increased likelihood of a larger loan. Of course, the borrower's credit rating and amount of current debt will also be a factor.

Loan Purposes
Secured loans can be used for a wide variety of purposes, from debt consolidation (such as paying "off" credit cards), to home improvements, to vacation money. The length of time a borrower has to pay off a secured loan will depend on the lending institution and the terms set forth in the loan, but can range anywhere from three to twenty-five years.

Because secure loans are exactly that--more secure for the lender--they typically have a lower interest rate. Interest is charged on the amount borrowed and calculated into an Annual Percentage Rate (APR). The loan is paid back monthly over the term of the loan.

Some arrangements include penalties for paying back the loan ahead of schedule. Secured loans are often larger than unsecured loans, given the security of the loan. Most fall into the £3,000 to £50,000 range, although they can go as high as £100,000.

source : http://www.ukpersonalloanstore.co.uk/articles/secured_loans_unsecured_loans.html