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A Guide To Secured Loans

Everyone needs loans. This includes college students, the average consumer and the successful investor. Whatever your financial situation, a loan can help you to get a step closer towards achieving your dreams. All you need to do is find the right lender and borrow the right loan.

Finding the Right Lender

When looking for a suitable lender to borrow money from, there are many factors that you need to consider. First and foremost, you need to identify a reputable lender that has been in the industry for several years and offered loans to a wide range of consumers. Since there are many lenders that can meet this requirement, you need to narrow down the search by checking the types of loans they offer as well as the loan application requirements.

For instance, if you want a secured loan, you need to check the types of securities the lender accepts as collateral. If a lender only accepts homes and cars, but you have a high-end motorcycle that you would like to use as security, you should continue your search.

You also need to check the terms and conditions offered by different lenders, in terms of repayment period, loan limits and interest rates. The processing fees charged by different lenders should also be checked to identify the most affordable lender for your needs.

Types of Loans

There are basically two types of loans. These are; secured-loans and unsecured-loans. Depending on your financial situation, you can apply for any one of these loans. Before you make a decision, however, you need to know the differences, pros and cons of these two loan-types.

Secured Loans

This is a type of loan that is fully-secured by a type of conventional security, such as a car logbook, title to a house, stock certificates, bonds, fixed deposit accounts and any other type of acceptable security. To get this type of loan, you must provide the lender with collateral. If you have a car, you can provide the lender with your logbook.

After processing the loan, the lender will put a lien on the car and issue the loan. In many cases, the loan amount can be anywhere from 50% to 70% of the value of the vehicle. A valuation must first be done by a reputable valuer to determine the actual value of the vehicle before the loan can be issued.

Once you get the loan, you will be required to make monthly payments until the entire principal and interest are paid off. If you default on the loan, the lender will have to repossess the car, or whatever asset you secured the loan with. The asset will then be auctioned off to pay off the outstanding balance of the loan.

The beauty of secured loans is that you do not need to have a reliable source of income as the lender can always recoup the full value of their loan be selling the asset if you default. The interest rate can also be much lower because of the almost-negligible risk the borrower poses to the lender. It is important to note that the asset must be fully insured throughout the repayment period. In case of damage or loss, the insurer should be able to replace or restore the asset to its original condition.

Unsecured Loans

As the name suggests, this type of loan is not offered against any type of conventional security. It is offered against the income of the borrower. The average monthly income of the borrower is used to calculate the maximum amount of money they can pay every month. Once the loan has been approved, a standing order is put on their main account.

In case of salaried individuals, the monthly instalments will be recovered through the check-off system provided by the employer. Unsecured loans usually come with a higher rate of interest since the lender is exposed to a lot of risk. In case the borrower loses their job, there will be no way for the lender to recover their funds. In fact, the lender may need to go after guarantors or seek the debtor declared bankrupt to recover their funds.

Now that you know a little bit about secured and unsecured loans, you may be able to make an informed decision regarding the best loan-type to borrow.

7.8% APRC Representative

Representative example: Assumed borrowing of £37,700 over 180 months, with a fixed borrowing rate of 6.4% per annum for the first 36 months, followed by 144 months at the lenders standard variable borrowing rate of 5.9%. There would be 36 monthly instalments of £356.89 followed by 144 instalments of £347.59. Total amount payable £63,021 comprised of; loan amount (£37,700); interest (£21,791); Broker fee (£3000) Lender fee (£530). This would result in an overall cost of 7.8% APRC.

 

Accepted.co.uk is a trading style of Paloma Digital Limited. Paloma Digital Limited is an introducer and we will search our panel of brokers to find the right loan for you. Data Protection Registration Number: Z9868049.

Paloma Digital Limited is authorised and regulated by the Financial Conduct Authority. Firm registration number 769794. See www.fca.org.uk

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

 

7.8% APRC Representative

Representative example: Assumed borrowing of £37,700 over 180 months, with a fixed borrowing rate of 6.4% per annum for the first 36 months, followed by 144 months at the lenders standard variable borrowing rate of 5.9%. There would be 36 monthly instalments of £356.89 followed by 144 instalments of £347.59. Total amount payable £63,021 comprised of; loan amount (£37,700); interest (£21,791); Broker fee (£3000) Lender fee (£530). This would result in an overall cost of 7.8% APRC.

Accepted.co.uk is a trading style of Paloma Digital Limited. Paloma Digital Limited is an introducer and we will search our panel of brokers to find the right loan for you. Data Protection Registration Number: Z9868049.

Paloma Digital Limited is authorised and regulated by the Financial Conduct Authority. Firm registration number 769794. See www.fca.org.uk

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.

Paloma Digital Ltd. Company Registration No. 6934249. Registered Office: Office 229, 275 Deansgate, Manchester M3 4EL.