Secured loans are often available for a wide range of purposes.
As part of your application, you may need to explain your precise reason for borrowing to the lender.
This is important, as different loan purposes attract different risk assessments from different providers. As a general rule of thumb, the lower the perceived risk, the lower the rate of interest you may be offered.
By their very nature, secured loans will require some kind of security, usually in the form of an asset, which acts as a guarantee for the loan. The most commonly used security is a residential property home (which is why some secured loans are often referred to as homeowner loans).
It may be possible to use your property as security even if it is owned in joint names, though you will need the support and agreement of the co-owner.
Some of the most common types of secured loan include:
- Debt Consolidation Loans – used for paying off a number of other debts with a single loan taken out with a significantly lower interest rate;
- Car Loans – a secured loan obtained through your own financing may be more cost-effective than looking for car finance through a dealership;
- Self-Employed Loans – historically, these have been rather difficult to find. However, things have changed considerably as the percentage of self-employed people in the economy is now much higher;
- Bad Credit Loans – if you have credit history problems then you may need a certain type of product that takes this into account, as some providers may see you as being a slightly higher risk;
- Wedding Loans – the cost of anything other than a basic wedding is now so high that many people are using secured loans as a means of financing their big day;
- Holiday Loans – if you are considering going on the holiday of a lifetime for a special event, then a secured loan can be used to cover the cost.
You may find that potential providers welcome applications for many, if not all, of these types of credit.
A common type of borrowing is the secured home improvement loan. Typically, if you renovate a kitchen or add a garage to your home then the value of your property will also increase, sometimes significantly, so investing in your property could actually see you make money when you come to sell it.
Home improvement loans may include things such as:
- new kitchens or bathrooms;
- landscape gardening;
- new home furnishings;
- any other home improvement purposes.
Different providers may specialise in different types of loan for specific purposes. It is sometimes useful to have help in understanding which providers may be particularly suitable for a given type of loan, so using the services of a loan specialist may be worth considering.
Of course, a secured loan provider may need to decline your application for a number of reasons, which they may or may not wish to share with you. It might also be a good idea to keep in mind that your home may be at risk if you are unable to keep up the repayments on a loan secured against it.