Are You Interested In Knowing More About Secured Loans?Fast Action Finance
Many people are not aware that there are different types of loans that one should be aware about before making a decision. The two main types of loans are secured loans and unsecured loans. Secured loans are loans which are taken but are protected by your own asset or property so that you have some backing to support your loan.
Unsecured loans are loans which are the direct opposite of secured loans as you do not place your wealth or property as backing for the loan you are claiming. Today, loans are becoming more and more common and it is pertinent to have ample knowledge about the differences between these loans. In this article we will take you through the differences.
As mentioned before, secured loans are loans that are taken on the backing of your own asset or property. You can also use collaterals to back your loan up. So for example, if you are taking a loan to purchase a car or a house, then you can use that item to be collateral for your loan. Then a lien would be placed on the item.
The institution you take the loan from, be it a bank or a financial institution, would hold the deed or the title of the item you have purchased and hold your collateral until you have returned back the loan amount in full. You would also need to pay back the interest amount completely and all the fees that accompany your loan amount for them to let go of the deed or title held on your collateral. You can use various different things to stand as your collateral. For example you can use stocks, personal property, bonds and other things to be your collateral for your loan as well.
Secured loans are the best and the only way to get large amounts of loan amount. This is because only when you provide a viable backing or collateral, would your lender be more assured and willing to lend you a large amount of money in return. This works because you have already given them a good amount of money in the form of a collateral or property backed up for them to claim their money back in case you do not pay back the loan amount. Placing your property as a reassurance for your lender also gives your lender the confidence that you would pay back the amount of money that was taken as a loan to reclaim back your property from them.
Examples of secured loans
Here we will take you through some examples of secured loans. Taking secured loans could include having mortgage loans for a house or any other property. You can also take secured loans for buying cars, be it old and used cars or for new cars. You can also take secured loans for recreational vehicles and as a boat loan. In these loans, as mentioned before, you would get a house, property or a car which you can place as collateral for your secured loan itself. You can also take a secured loan for a home equity line of credit.
Bear in mind that secured loans are not just for things that you purchase newly. You can also take secured loans for home equity loans or for home equity lines of credit as mentioned before. These types of secured loans are dependent on your amount of home equity. The amount of home equity simply refers to the market value of your house at that particular moment of time subtracting off the amount of money that you still owe your lender. Here, your house would be used as collateral for your secured loan as well, and if you do not pay up the sum of money in time then it might cause you to lose your house to your lender.
Benefits of secured loans
Taking secured loans, as mentioned before, gives your lender the reassurance that you are more likely to pay back the loan or at least that they can turn to your property placed as an alternative if they do not get the loan money back from you. For this reason, secured loans offer you lower interest rates and higher borrowing limits as mentioned before. You can also easily request for a longer repayment period of time compared to unsecured loans. Just remember that although you get these benefits from taking a secured loan, you are likely to lose your property placed as an assurance if you do not pay back the amount of money in the stated amount of time.
Unsecured loans: The opposite of secured loans
Unsecured loans on the other hand come with no backing on your side, and you can use the concept of unsecured loans for things like credit cards, education or personal loans. Since your lenders take more risk in giving you the loan amount, you would need to face quicker repayment durations and higher interest rates along with lower borrowing limits. Conditions of your loan drastically depend on your lenders borrowing situation and economic factors.
At Fast Action Finance, we grant up to $25,000 for secured loans. Collateral and title loans are both considered as secured loans so talk to us and learn more!