The Top 5 Benefits Of Getting A Secured Loan

Secured loans have multiple benefits, and can be primarily distinguished from a higher risk unsecured loan. In a secured loan, the terms of repayment are set against a particular asset. In most cases this asset is a house or other property, and can also be a car or other item of high value, for more information visit GBP Secured Loans. Secured loans generally result in longer repayment schedules, and low or fixed rates of interest compared to unsecured loans. This benefit, and more, including flexibility, debt consolidation, remortgaging, and alternative secured loan agreements, are developed below:

1 – More Stable Repayments

 

The main advantage to getting a secured loan is the ability to get lower rates of interest and a longer repayment schedule. The security offered by an asset will lower the amount of risk taken on by the bank or lending institution, who will be able to claim the asset as collateral in the event of you being unable to make repayments. While this kind of deal carries risks in a worst scenario, the advantage to you is that you have a more favourable loan. Many secured loans also come with a fixed rate of interest on repayments, which means that you are less likely to be negatively affected by inflation.

 

2 – Greater Flexibility

 

Secured loans have the advantage of providing greater flexibility for you and a lender. The collateral provided can mean that a lender is more likely to offer a loan, even if you have had a poor credit history in the past. Moreover, having a secured loan in place means that you will be more attractive as a borrower for other lenders. The trust built through a mortgage loan, demonstrated by consistent repayments, will help to mark yourself out as someone able to take out a new loan for a business or other project.

 

3 – Ability to Consolidate Debt

 

Secured loans have the advantage of being able to consolidate other debts against the value of a property. These debts may have accrued through credit cards and personal loans, and might involve steep rates of interest and the risk of repossession of other assets. By consolidating all of your debts through a secured loan, you can lower interest rates and spread out a loan over a much longer period of time.

 

4 – Second Loans and Remortgaging

 

A secured loan also provides the benefit of being able to be used for second loans and remortgaging. Organising the latter means that you can pay off a mortgage loan that you already have with a new loan. The advantage of doing so is that you can receive a better monthly interest rate on the loan, and can adjust your repayment schedule to be more suitable for your financial situation. This may be due to your need to adjust from a variable to a fixed interest rate.

 

5 – Alternative Options

 

Secured loans similarly carry the benefit of being available in a range of different forms. One way of gaining a low risk secured loan is through a guarantor loan. In this context, a third party, typically a spouse or a parent, offer their own property as part of the collateral for the loan. They agree to repay the loan if you cannot, and in doing so allow you to gradually boost your credit history, thus becoming eligible for new loans, and able to write off any past debt that you may have built up.

 

Author Bio: Liam Ohm is a finance blogger with expertise across several areas including loans. In his spare time he enjoys swimming, travelling and investing.

Comments are closed.