Secured Loans

The other name of secured loans are cheap loans. It is called so because the interest of such loan is minimum as compared to others source of loan.

It is possible in secured loans. The debtor of the loan is entitled with the minimum of interest. The creditor is agreed upon so because the collateral or the asset is in his control. And in the case of default by the debtor the real owner of the collateral changes, that is to say that the creditor of the loan is entitled with the bonafied owner of the asset.

The creditor also values the collateral as less then the real value it posses in the maturity of the loan period. So he is profit in case of default by the debtor.

Fast approval is one of the most important advantages that secured loans are providing. Various types of hassles that others loans provides are not in case of secured loans . It is possible because the creditor is entitled with the asset as collateral of loan and i the case of default he is entitled with the real owner of the collateral that is pledged.

Moreover the financial risk associated with the loan is not in the case of secured loans so the creditor of the loan is agreed with minimum of the criteria as others source of loans provides. In case of debtor of the loan various types of restrictions such as investing the amount in the pre-estimated field , and similar others are not in case of secured loans so he also offers the secured loans then goes for others source of loans.

Homeowners loan is a type of secured loan. It is called so because anyone who is the real owner then he is eligible for secured loans since the collateral is his house. But the thing that the so-called house owner should hold the bonafied title of the house.


Houseowners loans are risky as compared others type of secured loans because there is chances of losing the house which is also called one of the primary need for existence. It also aid the debtor that by keeping the single house he is entitled of obtaining huge amount of loan amount.

Secured loans reduce the burden of paying the high rate of interest for debtor to creditor.Also there is no any restrictions of using of asset that is being pledged by the creditor.



Generally interest rates of secured loan is low as compared to others loans. It is because the asset is in the name of creditor and there is no any financial risk regarding the default of payment by the debtor, as the default possess him the bonafide owner of the collateral. So the creditor is entitled to handover the sum which he held in a less return.



Moreover, the debtor also enjoys the others type of facilities such as there is less restriction as compared to others loans and many more.

Generally all citizens are elligable of secured loan if they possess the collateral of bonafide title and that is valided by the creditors.But there exist of some restrictions regarding of the secured loan.Some of the highlighted are listed below:

• If you have a bad credit history in the past then you are not illegible of obtaining secured loans.


• If you are not the bonafide title of the collateral .


• If the country is opposing to you about the loan.


• Has been declared as a bankrupt beforehand.


• If there is record of criminal against you .

Under the above listed condition if you escape, then there is no any question of non obtaining unsecured loan.

Generally there is no any obligation of paying the secured loan in the pre-estimated time.The creditor is entitled to pay off his all his burden before the maturity time for saving his interest of loan there onwards. But, if there the terms and conditions that the two parties namely, the creditor and debtor(s) had laid during the time of contract regarding the pre or post payments then the stated condition is applied. Sometimes if there is written that only in the stated time the loan is to be paid and creditor have the required amount with him then after paying some of the penalties he can be burden free . Also, if there is neogation between the two parties then they can follow any of the way they meet with the combine efforts.

The question can be raised regarding the death of the debtor. If the debtor dies and the loan is joint then the other party without any obligation have to pay the entire sum. For this lets take examples of husband and wife or two or more brothers.

If the debtor is single person then the creditor can do whatever he likes regarding the collateral if in the case the debt is unpaid. He is subject to hold the asset with a bonafide title. Some of the exceptions are there regarding single debtor. If the loan is taken for educational purpose say School Loan then the loan , may be still in the way of collecting.

One of the most important question regarding secured loan is that, How can I borrow from Secured Loan ?



There is no any criteria about the amount of debt which the debtor should think. Depending uppon the collateral that is going to be pledged, the loan amount varies. It also varies according to the companies rules and regulations. Some of the company can provide upto 90% of the collateral whereas some of them may provide only up to 40% or even less. The variation also depends uppon the type of the collateral, that is perishable like potatoes and so on or not , daily usage type like car and so on or fixed stable type like house and so on , collateral having depreciation like machinery and others or having appreciation like land and so on.



So depending on the above criteria the, general secured loan is provided by the creditor .

For the first the debtor seeks for the collateral which is to be pledged for the loan. Then the debtor makes the agreements with the creditor to lay him the loans. The creditors sees the assets that is going to be pledged by the debtor. Then he decides to give him the loan by that collateral, here the collateral is checked for its life, i.e, its lifetime should be more then the maturity period of the loan.
Now the related manager estimates the price of asset that is going to pledged in the maturity time of the loan. After finding its value in its maturity, now starts the private policy of the company. That is to say how much of the worth asset should be provided to the creditor. This differs to the type of asset and the terms of the company. After the proposal of company of providing a stated amount of money and if the debtor is convinced with the creditor , door of secured loan is opened.

Those loans provided only with the assets as security is termed as secured loan. Some of the features of secured loan are listed below:

• Provided only with collateral: All sorts of secured loans are provided only with collateral(assets). Without the assets secured loans cannot be taken.

• Low risk: The secured loan provides low risk to the borrower. Since the creditor is entitled with the possession of security, his financial risk is totally reduced. If the debtor is default of his payment then the creditor can sell the collateral to fulfill his amount.

• Low rate of Return: The secured loan provides less risk to creditor which results less return to him.As various risk is escaped the creditor will satisfy in less return.

• Less criteria: Secured loan provides less criteria to be fulfilled by debtor. Creditor should fulfill less restriction for taking his desired loan amount.

• Provided for all purpose: The loans provided with secured loan are flexible in nature. There is no any criteria for debtor for using his amount in only particular field as others source provide.
  

• Possession OF Real Assets. There is compulsion of possessing the real asset by the debtor. Without the collateral there is no way of obtaining secured loan. The collateral also should be real no any perishable assets are taken as collateral by the creditors.

• Proper Estimation is required. Before the loan is being taken there should be proper estimation of loans amount. It is required because the creditor provides less the amount that the collateral(assets) posses in the maturity of loans so by improper use of loan may transfer the collateral(assets) to creditor. This posses high loss to debtor.

• High risk. Unsecured loan provides high risk in the case of debtor. If due to some unexpected reason the debtor is default then the collateral which possess high value as compared to loan is transfer to creditor's hand with bonafide title.

• Restrictions. The creditors can impose various restrictions to debtor in case of collateral like car, houses,and so on.
  

• Lowest rate for using money. Generally interest rates of secured loans are lower as compared to others source of loans. Such loans provides less financial risk to creditor so they are entitled to provide their loan in minimum rate of return.

• Flexible terms. The terms of loans are flexible . Generally lender is entitled with the asset (that is collateral of loan) so is passive about the back payment of loan. The loan is also provided with less then the expected return of asset in the maturity time, so default posses more income to creditor.

• Provided for all purpose. Secured Loans are provided for multi-purpose. There is no restriction in usage of loans in fixed criteria as others various loans restrict the debtor of loan. So the debtor is free of using his amount in diverse field.

• Quick Procedure. Secured loans are quicker. Lender should not engage in fulfilling maximum criteria as should be engage in others loans. The application procedure is also simple without any hassles.

• A Mortgage Loan is a type of secured loan having the collateral of real assets such house, land , and so on.

• A Non Recourse Loan is a type of secured loan where the collateral is only security.

• A Foreclosure is legal platform of mortgage property where the collateral is sold for paying the debt of borrower in case of default.

• A Repossession of is a loan where the property like car is taken as collateral and is taken by the creditor in the case of default by the creditors.

A secured loan is a type of loan in which the borrower pledge some of his collateral, say house, land, car, firms, etc, for the purpose of obtaining loan from the lender. It is called secured loan because the loan is secured for lender. This is to say the lender of the loan provides loan amount below the the marginal cost of assets in the time of maturity. If the debtor(the receiver) is default for paying loan in the pre-estimated time then the creditor can enjoy the property of debtor which is pledged. In the hand of creditor secured loan grant him a bundle of right to specified property. The creditors cannot enjoy the right to use the pledged assets. For pledging perishable nature of goods are not pledged.


The purpose of secured loan is to minimize the financial risk associated with the transaction. Since it holds the assets and in case of default creditors enjoy the right to sell the assect to recover his credited amount. In the hand of debtor he may enjoys the more flexible in the terms of loan as compared to others unsecured loans.