A secured loan is a type of a borrowing that requires from the loaner presenting a secure against a loan amount. Such items as automobile, home or other valuable property can act as secure. In the event of nonpayment of the loan, the lender has a right to take the pledged property in order to cover the lost finance.
Real Property and Movable Property
Typically people use their real property or real estate to obtain secured loan. It is also possible to use your movable property as security for a secured loan. You can pledge such movable property as vehicles, jewelry, art items, furniture, household items and other property to secure a loan.
Unlike secured loans, unsecured loans are borrowings that don’t require from the borrowers any collateral. Among unsecured loans are such types as student loans and credit card debts. In case of inability to pay for a loan, the lender won’t be able to take your property. In this way you will lose your credit rating which will result in inability of obtaining a loan at good rates in future.
Secured Loan Advantages
The advantages of availing secured loans are such as they come with more favorable terms including lower interests and longer repayment period. Besides, these loans are typically easier to be obtained, as the lenders don’t carry risks when offer you a secured loan, so they are more willing to work with you.
A mortgage loan is a type of a secured borrowing in which a real property acts as collateral. The homeowners pledge their houses as a secure against a loan amount. The loan market is full of different types of mortgage loans that come with various types of interest rates, repayment periods, and modes of payment.
So as you’ve probably understood, secured loans are the type of the borrowing that require from the borrower to pledge either real property or movable property in order to secure the amount borrowed. Secured loans give you an access to better terms and conditions which make your deal a profitable for you. But one should also remember that in case of inability to pay the loan amount off, the pledged property will be lost.
The author is a professional loan expert specializing in secured loans. In his articles he provides people with valuable information regarding the best ways of obtaining required financial assistance through different types of loans.