What is a Secured Personal Loan?

I’m always happy to pass on great info, and this is great info! I’ve included a few snippets below lifted from the full article.

How a secured personal loan works

When a bank or lender issues you with a secured personal loan, they will first take security over one or more of your assets. In most cases this asset will be the one purchased using the funds from the loan.

The loan contract for a secured loan will specify the secured asset, and will state that the bank or lender has the legal right to take possession of the asset if you default on your personal loan repayments.

If you fall behind on your loan repayments and do not make suitable arrangements with the lender to repay your loan, they will have the legal right to take possession and sell the asset in order to clear your outstanding loan balance.

Benefits of secured personal loans

Because the bank can take possession of the asset securing a secured personal loan and can then sell that item to cover the outstanding loan balance, a secured personal loan is generally seen as a lower risk option for the bank than an unsecured personal loan.

Thanks to the reduced risks, banks and other lenders will generally be willing to offer a reduced interest rate on secured personal loans, which means less money out of your pocket. Secured personal loans can sometimes be easier to obtain, especially when applying for larger loan amounts. This is also a result of the lower risk perceived by the bank or lender.

Do you need more detail on this subject? Head on over to the full article here for more ideas and perspective. Afterwards, why not drop me an email to share your thoughts at [email protected]; or call me on (07) 3465 9259.

Thanks,

Craig