The demand for secured personal loans is on a rise in the UK credit market, as more and more people are opting for secured credit even for small monetary requirements. Market report shows that the loan seekers are slowly but surely realising that multiple unsecured debts - in the form of loans, payment cards and overdrafts - prove to be more costly, as they have high interest rates. Experts believe that the rising equity level in homes in the UK is also responsible for this shift in trends.
Secured loans are one of the most cost-effective transactions for all parties involved. For a lender it is a deal that guarantees repayment, whereas, for a borrower it is a deal that ensures maximum loan benefits like:
1.Fast attention, as presence of collateral guarantees repayment
2.High credit range - normally between ?5,000 and 250,000
3.Low APR - normally between 6.7% to 19.9% (subject to available equity)
4.Variety of rate plans like fixed, variable, discounted, capped or variable
5.Diverse repayment methods - capital, interest or partly interest and partly capital
6.Flexible loan terms and conditions like deferred payment up to 6 months, repayment holiday and accelerated repayment.
The above-mentioned benefits can be availed by any UK resident who is over 18 years of age, and is capable and willing to offer an asset as collateral against the loan amount - subject to the lender's credit policy, and the borrower's credit history, employment status, debt to income ratio (DTI = Debts/Income) and the value of the pledged collateral.
As every credit alternative has shortcomings, secured loans are no different. Clientele limitation (credit for homeowners and property owners only), slow approval procedure (due to property evaluation procedure) and collateral seizure threat (in case the borrower fails to payback) - are its drawbacks.
In nutshell, are a much cheaper alternative than all other credit options in the market. However, loan seekers must asses the practicality and feasibility of getting into property related legalities and risking their property for a small amount.
