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Why a Secured Loan, what are the Benefits?

Why a secured loansSecured loans are loans taken out against an asset belonging to the borrower as collateral(http://en.wikipedia.org/wiki/Secured_loan). This means should the borrower default, the lender has the power to seize this asset and sell it to satisfy the debt owed by the borrower. This type of loan has many strengths and weaknesses when compared to unsecured loans, which do not require an asset be nominated as collateral, and in fact usually go purely off credit rating.

Give this fact in mind, what would happen if you failed to pay your personal loan? After a period of time the courts would allow bailifs to reprosess items of property you own to the value of the outstanding debt. This means that all loans are some what secured. In the mean time is's unlikely that your house will be reprosessed to pay for a secured loan...

A Secured Loan is loan option given by a lender where you agree to release the equity in your house. The lender will therefore own a stake in your property and will be able to foreclose if you fail to make repayments.
Regardless of common beliefs the Lenders never wishes to repossess a property as this is very expensive and any profit made will be taken from arrangement fees. This is especially true now as property values are less than that stated when the loan was taken out. This means that Lenders will loose money by repossessing your house.

A secured loan is a great solution if you are wishing to borrow over £10K and may also want to consolidate high rates of credit you are currently paying. For example paying the minumum balance on your credit cards means that you will never settle your debt. A secured loan will allows you to consolidate these payment and save you as mush as £500 on your monthly payments.
For a detailed understanding of secured loans please visit our SWOT Article on Secured Loans.
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Updated on : Jul 23, 2010 9:42 AM
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