Warning: Late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk. We are a broker not a lender.
Warning: Late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk. We are a broker not a lender.
Oct 24, 2019
Life is an adventure. Finding a career, buying a home and starting a family are all signifiers of adulthood. However, even if you have a successful career, unforeseen expenses come out of nowhere. Since many people don't have an emergency fund they can dip into, borrowing money from a financial institution is often their best option.
If you're considering taking out a secured loan but aren't sure how it works, let this be your introduction to what you can expect when you apply for a loan. An individual's circumstances may change the specifics of the loan, but the process of applying for a loan is generally the same for everyone.
A secured loan is the long-term borrowing of a specific sum of money from an approved lender, usually a bank or other financial institution. The money is granted within one or two weeks in full and then repaid to the lender over a pre-set amount of time, often in monthly installments. Secured loans require the applicant to provide some type of collateral, such as their home or other property. If the loan is defaulted on, the lender keeps the collateral as repayment.
There are many advantages to secured loans, such as borrowing more money than with personal loans and longer repayment options. However, there are also some disadvantages. While lower than personal loans, the interest rates for secured loans can still be quite high. If you use your home as collateral, there is the risk of defaulting on the loan and losing your home.
One of the main advantages of a secured loan is that you are able to use it for just about anything. The loans are granted on having the resources to pay it back. Lenders often don't care why you need the loan. Here are just a few of the reasons people apply for secured loans:
People with bad credit often use secured loans when they need a cash inflow because they can use their property as collateral.
Under UK law, loan applications are given an eight-day cooling off period before the loan is approved. This allows the applicant to consider their other options and back out of the loan without penalty.