As the name suggests, a secured loan is a loan given to the borrower on a condition that he provides the lender with something as a security to the loan amount. Generally, the security offered is the borrower’s home. The property pledged as the security is called guarantee.

Secured loans are not risky for the lenders since they have something from which they can recover their loan amount, if the borrower fails to repay. For this reason, secured loans are offered at lower interest rates than the unsecured ones.

Secured loans are simpler to get since of the guarantee offered. The ability to offer guarantee makes the secured loan accessible to a whole lot of persons. People who are otherwise unable to prove their creditworthiness can get a secured loan if they have something to offer as guarantee for the loan. Secured loans can be full for a wide variety of purposes; in fact, any type of financial need can be fulfilled via a secured loan. Debt consolidation is one of the most well loved reasons why people take a secured loans. Depending on the value of guarantee offered the loan amount can range from £3,000 to £50,000. The lenders are not hesitant to offer a higher amount. If they are satisfied that the guarantee is of a sufficiently high value, they can even consider lending £100,000 or more. The repayment options available with secured loans vary with lenders. Generally, they are based on agreement between the borrower and the lender. Repayment period might range between three years to twenty five years. A prepayment penalty may be charged if you repay the loan earlier than the agreed period. The process of getting a secured loan has many costs associated with it. Since, guarantee is under question, the lender has to satisfy himself whether the value of guarantee is sufficiently high or not. If the guarantee is your home then he might have to get your property valued and this will incur some valuation charges. Solicitor’s fees to prepare the legal agreement, the conveyance to the property site and office charges are also included in the cost of getting a secured loan. The process of applying for secured loans is quite simple. Nowadays, many lenders are having their own websites. A borrower can submit an online application for such a loan request. He can also submit his application over a phone or into any of their offices. The process of getting approval for a secured loan is a small longer than the unsecured ones. The cause of the delay is the valuation of the property or guarantee. The paperwork that has to be done in pledging the guarantee also takes time. Lenders will also take the help of credit rating agencies to get a clear picture of your credit history. All these formalities will be completed within few weeks and you can hear about you loan within 30 days of applying. Every lending the upper classes has a legal obligation to say you about the interest they will payment on your loan. The APR (Annual Percentage Rate) is the most suitable indicator of this factor. The APR charged from you will depend upon your creditworthiness and equity in the property. The borrower should try to get the loan with lowest APR since it will help him pay the loan easily. Compelling a loan is a legal process and brings financial liability to the borrower. Even as compelling a loan, a credit agreement has to be signed; the terms and condition of which are binding on both the borrower and the lender. This fact itself should encourage the borrower to get into the minutest details of the loan agreement and get everything clear before signing on the dotted line