UK secured loans are relatively easy to procure as the lender is provided with collateral in the shape of an asset that can be either the borrower’s home or property. Secured loans provide a borrower with more options that are far more flexible.
A secured loan in layman’s terms is a loan, which is secured using one’s property as a guarantee. This means that if the borrower is unable to make a repayment on time, he/she will lose his/her property, as the collateral will be used as compensation in case a borrower defaults.
Advantages & Disadvantages of Secured Loans
In UK secured loans; it is like endangering your property. In case you are unable to make a payment on time, you will lose your home. However, secured loans have some benefits that make them a favourite with all borrowers. The interest rates are much lower and the terms of repayment are relatively borrower-friendly. The ARP offered on secured loans is consumer-friendly and attractive.
Secured loans come with different fringe benefits. Some of them can offer payment holidays, which means that you can stop making monthly instalments for some time and can look after unexpected expenses. You need to look very carefully and must shop around to find a suitable secured loan, as there are many available deals to choose from in the financial market.
Kinds of Collateral
The item you plan to purchase can also be used as collateral; it can be a home, a car or a piece of property. The lender will have the deed in his or her name until the borrower makes the payment in full. This will include the interest payable and other charges. If you have any stocks, bonds or jewelry, you can also secure your loan against them.
In case of secured loans, a borrower can borrow large amounts to cover his/her financial needs. As the lender wants security against the large amounts you are looking for, s/he needs some sort of security that you are able to repay the amount.