What is a quick secured loan?
A quick secured loan is a loan which someone will take out by securing an asset that they already loan against the money they have borrowed. If they fail to pay back the quick secured loan, then the lender who has lent the money reserves the right to repossess that asset, to then reclaim their investment.
Because of the security a lender has with a quick secured loan, this type of loan carries a lower interest rate than an unsecured loan, although is not as popular because of the risks involved.
The majority of quick secured loans are secured against a borrower’s home, where they use equity in their home as their asset. Whilst no as common, other borrowers have used their cars, jewellery, a painting or other artwork as leverage for their loans in the past. A lender will approve whatever they feel is appropriate.
How does a quick secured loan work?
When a borrower decides that they want to take out a quick secured loan, they must work out how much they want to borrow, and how much equity in they have in their home, assuming this is the way they wish to borrow the money.
To work out how much equity you have in your home, you simply need to take the outstanding value of your mortgage away from the value of your home. This will leave you with your equity. If you owe more money than the value of your home, you are in negative equity, and will not be able to take out a quick secured loan using equity as leverage for your loan as you do not have any.
If a customer who takes out a quick secured loan then fails to make their loan repayments, a lender is entitled to repossess and sell the customers home to make back their money. Not all mortgage agreements allow secured lending on a home so be sure to check with your mortgage provider when taking out a secured loan.
Why would I take out a quick secured loan?
There are many reasons why people choose to take out quick secured loans, with the biggest reason being to make improvements to their homes. Others will use the money to consolidate other expensive existing debts, like credit and store cards.