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Secured Loan Advice

Obtaining a secured loan can be one of the cheapest and hassle free ways to acquire a loan. What is more, a secured loan can be comfortably repaid over an agreed number of years. Basically, a secured loan is a loan where the consumer’s home, or another valuable asset, is used as collateral to secure a loan from the lender. However, compared to unsecured loans, the risks surrounding secured loans are significant. In most cases, your home must be used as collateral against the loan, so it can be repossessed by the lender if you fail to keep up with repayments. With this in mind, taking out a secured loan is a decision not to be made lightly. Using you home as collateral against a loan is a big risk and it is vital to keep up with repayments.

Secured loans are usually significantly larger than unsecured loans, ranging from about £5,000 to £75,000 and can be repaid over a longer term of up to 25 years. Lenders will charge an annual percentage rate (APR) on the amount you borrow. At present, interest rates on secured loans range from about seven percent to eight percent.

When shopping for any product, financial or otherwise, it always pays to shop around. Approach a number of lenders to see who offers you the most favourable interest rate. Also examine the terms and conditions of the loan closely. For example, some lenders will penalise you if you pay off the loan early. This is known as a redemption fee. However, if you feel you might pay off the loan early, thus saving money on interest repayments, find a lender who does not charge these fees, or negotiate so that the your lender agrees to waive such fees.

There are countless banks and financial services offering secured loans in Britain today, and there are many ways you can apply. You can simply visit an outlet of any high-street bank, or you can apply by phone, online or by a written application.

The amount you can borrow will depend on the value of the collateral and your own financial situation. If you are self-employed, unemployed, or if you have a poor credit rating, the amount you can borrow will most likely be limited. However, if you are in a sound financial situation with a steady income you may be able to borrow up to 125 percent of the value of your collateral.

On smaller secured loans, under £25,000, you will be given seven days to make sure you are happy with all the terms of the agreement. If not, you can cancel the agreement within this seven-day limit.