These should be seen as the lending of the last resort because the risk to the borrower can be so much more severe than unsecured borrowing.
Secured loans mean that a borrower has to provide some security before they are accepted for a loan. This is usually a car or a house. Individuals who are considering taking out a secured loan need to consider the risks carefully and ensure that they can meet the repayment schedule.
Secured loans are money borrowed against an asset, for example, a car or house, which acts as a guarantee that the loan will be repaid. Secured loans can be secured on almost any asset that is owned by the person taking out the loan – although the most common form of secured loan is a mortgage and the security therefore a house.
This type of loan tends to be quicker to arrange, more flexible enabling you to spread your borrowing over a longer period and come with more competitive interest rates as there is less risk for the lender. It is worth shopping around for secured loan deals as some will be more competitive than others.
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