Getting a secured loan can be a fairly straightforward process as long as you have an asset to provide the security and only ask for what you really need.
This type of loan is the ideal solution if you have a less than perfect credit history, need to borrow a large amount or want the opportunity to repay the loan over a relatively long period of time. It must be remembered, however, that this type of loan is usually secured against your home, meaning that you could be left with nowhere to live if you fail to meet the repayments
There are various types of secured loans, ranging from those for the self-employed to debt consolidation loans, but all lenders will need you to demonstrate that you have the assets on which to secure your borrowing and that you have the means to make your repayments.
The first step in obtaining a secured loan is deciding how much you need to borrow. This decision should be based on what you need the money for, how much collateral you have and how much you actually need in order to avoid having to pay excessive amounts of interest.
The most common form of collateral used to obtain a secured loan is a property, and many lenders require that you own and live in the property in question.
Once you have decided how much you need, you should speak to your chosen lender in order to determine the best loan option to meet your requirements. Of course, you will need to consider the APR (annual percentage rate), but there are other factors that you also need to think about.
The repayment term of your loan is an important consideration. You may want a longer term in order to minimize your regular repayments, but it is important to remember that this will mean that you have the debt for longer and you will end up paying more in interest. You also need to look at any additional fees which may be applied to a specific loan and any penalties which may be applied if you miss payments or pay late or if you choose to repay the loan early.
Your lender can guide you through the process of finding the best loan for you, but you should still make it your responsibility to check the details and ensure that all of the terms agreed appear in the documentation before you sign on the dotted line.
Before you are accepted for a loan, you will need to provide proof of earnings and demonstrate that you are capable of repaying the loan. Lenders will usually carry out credit checks, but in the case of many secured loans this is only one part of the decision-making process. If you have assets to secure your loan against, your lender will feel much more able to consider your personal circumstances in more detail. This means that even if your credit rating is poor, you will not automatically be disqualified from obtaining this type of loan. Most important in this case is that you can demonstrate your ability to make your repayments.
In many cases, you will also need to show that you are a homeowner who lives in your own property and that this is based in the UK. You will usually have to be in employment, or have been self-employed for at least a year, and be over the age of 18.
If you meet these criteria, a secured loan can be an ideal way of getting the money that you need, over a term that you want and with a lower rate of interest than you might otherwise pay.