Let’s talk about secured loans! Here’s what you need to know!
SECURED LOANS? CAN I HAVE MORE THAN ONE?
What is a secured personal loan?
A secured loan may be the only option if you have bad credit and haven’t been approved for a bad credit loan.A secured personal loan is a loan is a loan or line of credit secured against an asset that you own or purchase with the loan. For example a car or more commonly a house.
How do I know if a secured loan is what I’m looking for?
Firstly you need to ask yourself a few questions:
What is the asset you are looking to buy or have to use as security?
Generally when people are looking at taking out a secured loan it is usually for a purpose like purchasing a car, home or renovations.
The lender you apply with will assess whether your asset meets their loan requirements before approving the loan.
Do you earn enough to meet the loan repayments?
Like any loan the lender will assess if you are in a position to repay the loan under the responsible lending guidelines. If they approve your loan and for some reason you are unable to meet the repayments then they are within their rights to repossess the asset to cover their losses.
What will the lender ask me for when I apply for a secured loan?
Different lenders may have different requirements, however most will require:
The vehicle to be a certain age or newer
If you are using term deposit as collateral then it must be a certain amount.
A house must be of equal value or more.
Assets commonly used for secured loans:
EQUITY: Many customers these days are choosing to draw on the equity in their homes to make large purchases, like a new car or home renovations.
NEW CAR: You can use any vehicle under 2yrs to secure a loan, this will guarantee to a lender that if you are unable to make the repayments they can repossess the vehicle, car, motorbike, caravan etc. However, ensure you avoid lenders that are in hot water.
USED CARS: Some lenders will accept secured loans for cars up to 10 years old, so shop around for the best deals.
TERM DEPOSITS: Some financial institutions will allow you to secure a loan against your term deposit, the bank will repossess your term deposit if you are unable to meet your repayments on your loan.
OTHER ASSETS: Some lenders may be more flexible with what they will accept as a secured loan, therefore they may allow you to draw on things such as:
Art, Jewellery, Antiques, Antique cars etc.
So where do I look for a secured personal loan?
Most banks and credit unions will offer secured personal loans for new and used cars, home and equity loans and term deposit secured loans. Find out how personal loans can help here.
If you are looking for a personal asset secured loan, which are usually things like jewellery, art, antiques and some vehicle purchases like motorbikes, boats or vintage cars. You may need to be looking at less traditional lenders and lenders who aren’t as stringent as the big banks.
Your items will be required to be valued and assessed for their re-sale value and will then be used as security against the loan you are applying for.
The key to deciding on a secured loan is knowing your limits and the worth of your assets, this way you can be a good judge on whether you are being offered a good deal.
However, before you apply for a secured personal loan, ensure you have done your homework and you are sure you can afford the repayments because if you cannot the lender is within their rights to repossess the assets to recoup their losses.
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