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2008-02-15 00:16:19
Collateral Loans - What Are They and How Can They Be Useful?
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 A collateral loan is exactly how it sounds.
You obtain a loan by providing something in collateral, which is usually some or all of the equity in your home.
Now why on earth would you want to take out a collateral loan (click here to apply), or "secured loan", when you could simply take out an unsecured loan and not have to pledge the equity in your home as collateral?
There are many reasons, including:
1. You will pay much lower interest rates if you can offer the lending collateral. We are talking about a difference of potentially 7-10% a year in annual interest rates.
2. You can borrow much more money if you are taking out a secured loan compared to an unsecured loan.
3. You will have much longer to pay the long off (up to 25 years, try requesting a 25 year payout with an unsecured loan).
4. It is much easier to be approved for a secured loan than an unsecured loan (why? Because the bank has much less risk with you, due to the fact that you have something to pledge for collateral).
Secured loans can be useful because they can help you leverage the equity in your home. Has your flat gone up substantially in the past few years, but you don't particularly want to sell it yet? A secured loan is a good way of using a growing asset to tap a substantial amount of potential borrowing power.
"Collateral" loans can be used for an assortment of different reasons, including home improvement loans, debt consolidation loans and new vehicle purchase loans.
A typical interest rate payable on a secured loan, or "collateral loan", would be between 8.5 to 10% per year. If you find yourself being quoted a price higher than that, then you should look elsewhere and keep shopping around.
Most secured loan firms will offer 125% "Collateral" loans, which means that you can borrow an amount up to 125% of the value of your home, less the outstanding mortgage. So if you had a flat that was worth 200k and had a 50k mortgage left on the property, then you could potentially borrow up to 200k. Keep in mind that most secured loan firms will have a 100k ceiling on their loan amounts, though if you really need more, they will likely accomodate you if you have a good reason for needing such a large loan.
We offer a free service in which we will scour our database of over 250+ lenders to find you the best deal. Simply click on the link below and fill out our five minute application form, and then we will do the rest!
Apply for a Lending Place secured loan today!
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Get Your Free Loan Offer Today - Click Here
There is NO FEE and you are under NO OBLIGATION!
We'll Compare over 250 loan plans and search over 90% of the loan market.
Applicants with bad credit history, Mortgage Arrears, Missed payments or CCJs are welcome.
A lot of big banks are competing for your business - Apply Today
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