Secured loans are loans that are secured with something of value that is high enough to cover default on the repayments of the loan. It is usually your house, which means that secured loans are essentially only available for those people who already are homeowners.
Of course, your credit history and financial position extrapolated into the loan repayment future is also taken into consideration. But the fact that you are a homeowner will go a long way towards you being considered favourably for any loan you may apply for.
Like most things in life, secured loans do not come as a single identical entity. They differ, depending on who is offering them, and they can differ a lot in some cases too. This is why you need to be very careful when considering taking out a loan.
You need to be on top of all the current factors on offer, and you need to be extremely vigilant too. It's no good taking out what you think is a good offer, only to find a better one next Monday morning. You will find no sympathy from anyone, and you will be stuck with the loan you have agreed to.
Secured loans are, generally speaking, only used when you need to borrow a fairly significant amount of money. This could be for things such as, home improvement where you might want to build an extension on your house, or substantially refit a kitchen or bathroom. If you need to purchase a new car, or finance a holiday in the sun, then it is more common to take out an unsecured loan, as this is generally a lower amount of money sought. As a rough rule of thumb, if you need an amount that is less than £25,000, then an unsecured loan may be your better choice.
Whichever type of loan you choose to take out, you would be very wise to consider some kind of payment protection insurance. This kind of insurance, that covers you in the event that you are unable to make repayments due to sickness, accident or unemployment, may be offered to you as part of a package when you apply for your loan. However, you can always shop around and find the best deal on offer, which may be significantly more suitable for you than what you have been offered in the package.
It is extremely important to bear in mind that secured loans have the capability to put your home at risk in the event of worst situation happening. This is why you need to have some form of payment protection insurance in addition to the loan. No one knows for certain what the future holds, and especially if you have a family, you need to know that should the worst happen, they will be adequately protected.
Secured loans require careful consideration before plunging in. The money involved is usually a lot and the commitment is considerable too. Of course, the bank or building society you apply to will do checks on you to determine your suitability. But you should also check yourself thoroughly first to see that you really are suitable. It could save you a lot of difficulty later.
Searching for a secured loan? Compare secured loans at Money Only. Money Only provide clear and impartial answers to anybody wishing to compare secured loans in the UK.