Some experts might frown at secured loans, unsecured loans and all forms of borrowing but this writer does not. A secured loan is one of the foundations of the British economic system. In fact, the loan concept is just common sense and pragmatism at work. You do not always have as much cash as you need. Plus, there are times you might be expecting some long-term cash but you may not have short-term cash to carry out certain projects. Again, you have probably invested some of your capital in the stock market or in gold bars.
This means that you have put your money to work and this is a smart idea. However, if your cash is tied up in solid assets, you might require liquid assets in the interim. This is where secured loans come into the picture. You simply talk to your banker, discuss your needs and you get a loan to solve your problem. It is as simple as that because banks are in business to lend you money if you can prove you will repay the loan. Below are some ways you can use loans to your advantage.
Loans for Capital Projects
If you run a manufacturing concern in the UK, you might require a secured loan to invest in machinery or to increase your capacity. In this case, you simply write an elaborate proposal and submit it to your banker. Note that no bank will give you a loan if you do not follow the right procedure. State how much you need, why you need the loan and how you intend to repay the loan. In addition, you must provide collateral so that the bank will not lose money if you default. Once you have followed these steps, your bank will give you the loan.
Of course, you must maintain a healthy relationship with your bank before you even apply for the loan. For instance, you already have a current account and a savings account with the bank and you have had these accounts for many months or years. It will also help your case if your employees have salary accounts with the bank that wants to give you the loan.
Loans for Investments
Generally bankers are conservative people. They do not take any unnecessary risks because customers’ deposits are held in trust. However, if you have a sound investment idea, your bank will gladly lend you money. Now, let us assume you are in the real estate business. This business is a goldmine especially if you are investing in London or Birmingham.
You have just finished paying off the mortgage on your home and you want to become a real estate baron. You want to buy a second home and then a third one. Ultimately, you want to own a housing estate and a few hotels. Well, everything is possible if you have the right plan. Discuss the idea with the real estate manager of your bank. Put up your home as collateral and you will get the cash to buy a second home. Pay off the loan and you can put up both houses as collateral and get the cash to buy two more houses. Repeat this process a few times and you have the housing estate of your dreams.
Enjoying the Benefit of Unsecured Loans
If you need short term financing, you can get easily get an unsecured loan from your bank. Maybe you are a contractor and you supply general goods to reputable firms in your area. Once in a while, you might have a big contract without the liquid assets to supply the goods.
Just talk to your banker and tender the LPO and other contract documents. The banker will simply verify that your LPO is genuine and that you will get paid after you supply the goods. Once this has been confirmed, you will get an overdraft from your banker.
As you can see, there is nothing wrong with borrowing money when you really need the cash. The thing is that the cash you borrow must be put to good use. Do not take a loan to buy a liability. Use your loans to buy assets that will add value to your life. Borrow money to fund investments and repay the loan promptly. This is the best way to use credit to your advantage.