What is a Secured Loan in the UK?
A secured loan is basically a personal loan to an individual that’s guaranteed by equity in property owned by the borrower. This could mean a home or car is used to secure the loan, which in turns allows the borrower to receive a better rate due to the security that’s being offered.
Many people prefer to apply for secured loans rather than borrowing from friends or relatives. The reasons for borrowing can range from personal expenses, a great vacation, making improvements to a home, or to consolidate a number of loans into one manageable payment. For a vast majority of the population, meeting monthly bill requirements on a number of loans is harder to do these days due to the uncertain economic conditions we face.
Before you apply for a secured loan, you may want to have your credit record checked. This will allow you to correct any anomalies that may be on the report. This will ensure that when you do apply for your loan, there will be no unpleasant surprises, and if your credit rating is good, then you can expect to receive a low interest rate. When a person applying is turned down they’re left wondering what went wrong, denied the funding they’ve applied for, and subsequently must start from the beginning.[easyazon-image align=”right” asin=”019826013X” locale=”us” height=”400″ src=”http://ecx.images-amazon.com/images/I/41eQhIJj3HL.jpg” width=”300″]
How to Prepare to Apply for a Secured Loan in the UK
We’ve already mentioned a thorough review of your credit rating before applying for a secured loan, but you will also want to take along other necessary documentation that will be asked for. You may be asked for documentation proving your income from all sources, tax returns for the previous year and documentation about the property you will be using to secure the loan.
It’s also wise to research the different loan companies and the current loan rates, in order to ensure that the company you’re dealing with has a clean record and is truly offering you a rate that is considered fair and affordable. Dealing with an honest lender is of the utmost importance when borrowing money and will result in a happier relationship over time and a positive outcome for both sides.
Are You Ready to Proceed?
When you’ve done your homework and have your paperwork ready and if you feel you’re fully prepared, it’s time to approach the loan company that you have thoroughly researched. On the other hand, if you still have questions you can approach the loan company and ask any questions you may have. A reputable firm will welcome any inquires you have and will help you to understand the complete process. They’ll also help you to understand the different loan options available to you, and ensure that you are choosing the one that’s best suited to your situation.
Why Choose a Secured Loan?
Today, secured loans have become the most preferred option for those wanting to borrow money. This is especially true, since many people are not comfortable with re-mortgaging their home. A secured loan can also be a remedy for those with bad credit ratings, although they will have to pay a higher interest rate due to the risk they pose. If they have assets with equity, then they too will be likely to be approved. Providing loans to people with bad credit helps them to manage their obligations successfully and improve their credit rating when the loan has been repaid. No matter what you reason may be for applying for a loan, a secure loan is a truly viable option for today’s borrower.
Wendy Derbyshire is a blogger who writes to educate her readers on financial matters such as how to apply for secured loans and tips for effective budgeting to help them receive the best financial outcome in their current financial situation.