With the popularity of secured loans peaking in the UK, it is becoming more important than ever for Brits to try to obtain the best secured loan rate. The loan rate is the interest rate, or annual percentage rate (APR) a lender charges to a borrower to provide them with loan funds. Even a fraction of a percentage point difference in the interest rate can have a big impact on the cost to repay debt.
Secured loans come in various shapes in sizes. Unlike credit cards, and other types of unsecured loans, secured covers require the borrower to provide the lender with security against an asset. Homeowner loans are a common example of a secured cover. Some other loan types may be secured by cars, or other specific asset types. The main difference between a secured loan and one that is not secured is that the borrower is placing more than just his credit reputation at risk with the security. If borrower fails to meet his debt obligations, under a secured loan, he could risk losing his property to foreclosure or lender repossession.
There are many benefits to both the lender and the borrower when collateral is used to obtain a loan. For the lender, it means a reduced risk of non-payment or financial loss. The borrower either repays their loan, which is ideal, or he does not, and the bank or lender gets the collateral in exchange. Most lenders offer a better secured loan rate than unsecured as there is less risk. The lower the lender's risk, the more flexible they are with loan amounts, and the more willing they are to reduce loan costs (interest payments) to the borrower.
Borrowers look for a secured loan rate for many reasons. Some simply want the best APR possible and know that providing security to the lender gives them that. Some bad credit borrowers have little or no choice but to secure their loan. Lenders require security for some debtors, but often the rate differential forces the borrower to opt for the secured option. Securing a loan gives bad or fair credit borrowers a chance to get loans that might not otherwise, and to rebuild their damaged credit. Of course, their property is at risk in the event of non-repayment.
One of the best advantages borrowers have in today's loan environment can be credited to the independent or stand alone loan broker industry. Loan brokers specialize in helping consumers get matched to the best available loan products and rates given their specific situations and credit. Many brokers can help bad debt qualifiers find a secured loan rate by carefully examining all opportunities and maintaining good relationships with a collection of lenders. Current loan rates for secured products are as low as ever, based on interest rate cuts over the last year. The average APR for a secured loan is about 11 to 12 per cent, with some good credit borrowers finding interest rates as low as 5 per cent.
If you’ve made the decision to apply for a secured loan, you’re likely to have done a bit of homework in regards of current interest rates, traditional fees for preparing the necessary documents, and of course, the fee your lender will charge you for your secured loan. If you have yet to accomplish the above tasks, you should at least begin the process before you begin to contact potential secured lenders. So here’s a bit of basic info for you (and if you’re already familiar with it, let’s just consider it a refresher course, shall we?).
The most common type of secured loan is a mortgage; one of the largest bills that you will ever have in your life. There are a wide variety of fees in all shapes, sizes and colors for you to decipher through, so be sure to pack your x-ray goggles!
First things first, we have the APR – it’s the amount that you will be paying each year for your loan. Also known as the Annual Percentage Rate, it will include the interest rate, fees, and certain other charges calculated on a yearly basis to come up with one complete percentage. It’s usually a bit higher than the interest rate that you’re quoted, as it includes the other fees.
Be sure that you know the terms for “fees" as many of them can be hidden or covered up as something else. “Points" are one of the more popular fees, and can range in purpose to get you a lower interest rate to an honest loan officer telling you that’s how he’ll fill his paypacket. When in doubt, ask questions! If you’re not happy with the answers you received, ask someone else. Ask all the way up to the president of the company, as this is your money we’re talking about here. And don’t sign anything that you’re not 100% sure about.
And last but not least, be sure to shop around- don’t put all of your eggs into one proverbial basket, so to speak. There are, unfortunately quite a few bad loan originators (often referred to in the industry as “predators") in the secured loan industry that are completing the old “Bait and Switch" routine on you- promising the moon and stars to you, their special client, but all the while they have no such program waiting for you (and you are now in a difficult position: either choose the horrid loan program that you got switched into, or no loan at all). By shopping around, and informing the competing lenders that they are not alone, you are setting yourself up for an ideal, winning secured loan situation.
When the application process commences, it’s very important to remember that you can change your mind at any time without penalty or fine. Sometimes our gut instinct tells us something that we just can’t avoid, and it’s often best to listen to our gut
Both Louis Rix & James Kinley are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Louis Rix has sinced written about articles on various topics from Used Car, Finances and Used Car. Louis Rix is Director of Netloans Ltd, a leading Secured Loan Broker for UK Homeowners offering a service and homeowner loans for any purpose, ensuring that t. Louis Rix's top article generates over 246000 views. to your Favourites.
James Kinley has sinced written about articles on various topics from Debts Loans, Finances and A Secured Loan. James Kinley recommends for secured loans.. James Kinley's top article generates over 4400 views. to your Favourites.