There may come a time when you are in need of financial assistance. This is where banks and specifically loan lenders can be of immense help. Given that fact, there are numerous types of loans, each with different characteristics. Choose one that may suit your financial demands.
A secured loan is one of the types. It reduces the risk for the lender using assets or property as collateral. However, borrowers enjoy low interest rates but they may lose their property if the loan is not repaid on time. Given the huge amount of lending services, you must compare secured loans online at finance.co.uk. Nevertheless, under this category are different sub-categories. Here we will discuss different types of secured loans:
1. Mortgages
A mortgage is a loan secured by the property being purchased. If the borrower fails to pay the mortgage, lender will sell it at an auction and foreclose the property. Since homes are large purchases, mortgages generally last 15 to 20 years. Fixed rate and adjustable rate mortgages are two of the most common types.
2. Vehicle loans
This loans uses a car as a collateral. The lender will evaluate the worth of the car and pay its price to the borrower and the borrower can then pay off the amount in monthly installments. The lender even charges interest on the borrowed amount. Before approval of the loan, the lender can check the credit history. However, people with poor credit history can still be approved for the loan but the interest rates are then higher than the usual amount. Even a down payment of about 10 to 20% may be required.
3. Pawnbroker loans
Hereby, pawnbrokers offer short-term loans placing a temporary lien on the property the borrower has provided as a collateral. There are many common items that borrowers offer as collateral such as tools, jewelry, musical instruments and electronic items. The value of the collateral determines the amount of the loan. The time-frame is given by the pawnbroker within which the loan must be repaid as well the interest. The pawnbroker takes the ownership of collateral and puts it up for sale if the loan is not repaid within a stipulated period of time.
4. Title loans
These are short-term loans that are paid off using vehicles as collateral. The vehicle must be in good quality in order to qualify for the loan. It depends on the lending service but generally the car must be insured as well. Vehicle pricing guides are used to determine the car’s value and the amount of the loan is then assessed. The borrower must have steady income to show that he is capable of repaying the amount, and hence can qualify. Title loans usually have higher interest rates compared to other secured loans.
Conclusion
Here were some types of secured loans. One must choose loans according to their long-term and short-term objectives. There are multiple secured loans in the UK which a person can acquire to cover their financial demands. Read the types carefully and evaluate the pros and cons in the context of your situation, in order to get the best deal.
