QandAs: Loans

What is a Secured Personal Loan?

Answer:
A secured personal loan is a bank or credit

union loan that requires collateral or security. Collateral can be any piece of property that is equivalent to the loan amount. The purpose of such collateral is to secure the loan. In the event that a borrower cannot repay the entire debt obligation, the lender can claim the collateral as repayment.

If you need a personal loan for debt consolidation , home improvement , or college expense , a secured personal loan may be right for you. Likewise, a secured personal loan can help persons with bad credit. Lenders are more apt to extend credit to a bad credit applicant when property secures the loan.

The benefits of a secured personal loan are numerous. Interest rates on a secured personal loan are typically lower than the rate on an unsecured personal loan. Thus, borrowers enjoy manageable monthly payments and flexible repayment options. In addition, it is much easier for self-employed individuals and persons with bankruptcy, repossessions, or late payments to obtain a secured loan. Needless to say, if a borrower defaults on loan payments, the lender can take possession of their collateral and seek legal action to recover funds. The best way to avoid this headache is to borrow an affordable amount and make on-time payments.


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