Analyze if secured loans and lines of credit may be right for your borrowing needs.
Secured loans are loans to fixed interest rate, with refund through monthly installments constant amount.
The secured loans also require collateral as required by the client, which are not necessary in the case of simple personal loan or loan completed.
The loan size depends on the guarantees given by the client.
Loans granted in regime of protection have more favorable conditions for the applicant and duration longer time than personal loans; also it may be granted to persons with a history of risk.
Guarantee loans can also give a different person for the loan (in this case, anger to ensure the necessary loan wage).
When creditors offer cash, they look for a reasonable assurance that the money will be returned. The story of a borrower excellent credit can help to calm the fears of the lender, especially if the loan amount is relatively small.
For bigger loans, however, a guarantee of some sort is usually required, the borrower can seize in case of default. Loans backed by collateral as they are known as secured loans. In basic guarantee loans, the balance on a credit card is an unsecured typical warranty.
While the card issuer credit checks your employment status, annual income, outstanding debt today and credit score, the issuer has no specific guarantee. In other words, if you can not pay your balance, there is no specific asset that the issuer can seize and sell to recoup their losses.
The loan is backed mainly by reputation (in the modern world this is your credit score and history); Secured loan; home mortgage, on the other hand, is a typical example of a secured loan.
The loan is secured by the house; the bank can seize and sell if you can not pay your mortgage. To ensure that this guarantee is not canceled before the loan is repaid; the lender will force restrictions on the sale of the house. This is almost always the case of secured loans.
The loan guarantee backup can not be sold without the consent of the lender;
Collateral depreciation; It may seem that borrowing money for a mortgage, backed by a home is a risk free proposition for the bank. However, the bank has an obvious risk, due to two factors.
First, the price of housing may fall significantly as many owners have discovered during the recent financial crisis. The value of almost anything you back up a loan may decline.
Therefore, the lender can not recover the full value of the loan by confiscating and selling the collateral in case of default; Cost recovery and also the process of seizure and sale of collateral is usually a costly process. The lender must often the borrower to court, therefore pays the attorney and other legal expenses, and then incur expenses, while the sale of the collateral.
When selling a foreclosed home, the bank must pay for a broker and clean the house, for example.
Interest rates, despite the fact that even protected loans are not fully secure, provide a greater degree of protection for the lender unsecured loans. As a result, the interest rate on secured loans is generally inferior, and you can borrow a greater amount when you can provide the guarantee.