Whenever someone requires money, he can take out a loan from a bank
Secured Loans
and
Unsecured Loans
In case of a secured loan, the borrower
has to put up his property as a security, whereas in case of an unsecured
loan, there is no need to offer collateral.
Secured loans have several advantages over unsecured loans:-
- The rates of interest on secured loans are lower than the rates on unsecured loans.
- Lenders offer flexible repayment terms on secured loans. If you think that monthly installments of a loan are unaffordable, the lender may extend your loan period so that the amount of monthly installments gets reduced.
Secured loans can be taken out for a number of purposes.
A secured home loan can be used to buy a house. A secured debt consolidation loan can be used to consolidate debt.
There is a wide range of secured loan amounts that can be obtained.
Lenders usually offer loan amounts ranging between £5,000 and
£75,000.
There are several modes of applying for a secured loan:-
- One of the methods involves visiting the lender’s
office and applying for a loan.
- Many lenders also accept applications over the phone. This is less time consuming than the above mentioned
mode of applying for a loan.
- Another method of applying for a loan involves mailing a written application.
- The method that is gaining popularity is the online loan application process. It offers borrowers the easiest
way to apply for a secured loan.
Loans for amounts up to £25,000 are covered
by the Consumer Credit Act, 1974. Such loans are known as regulated
loans. Loans for amounts more than £25,000 are unregulated. In
case of regulated loan, the lender has to offer a consideration period
of 7 days to the borrower. An unfortunate event such as death, accident,
sickness, unemployment, may render you or your family unable to repay
the loan. To avoid such a situation, the lenders offer insurance policies
and payment protection schemes. If you fail to repay your loan because
of any of the above mentioned reasons, the insurance company will pay
the balance amount.
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