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Secured Loans
What is a Secured Loan and what are the
risks?A Secured Loan is a loan secured on the homeowners property
very much in the same way as a Mortgage is. A Mortgage on a property is known as
the 1st Charge – a Secured Loan therefore becomes the 2nd Charge. If a Secured
Loan is never paid then obviously the Homeowners home is at risk. With the
Mortgage company having the 1st charge they therefore reclaim their money first.
A Secured
Loan Lender would then follow as they are the 2nd charge. It is worth
remembering that a Mortgage and Secured Loan Company would only ever repossess a
property as a last resort.
A Secured Loan is ideal for Homeowners who
are looking to raise finance by using their home as security. Traditionally a
Secured Loan can provide Homeowners with a lower APR than that of an Unsecured
Loan. Obviously a Loan Lenders APR varies depending on the personal
circumstances of the applicant. A Secured Loan can be used for a variety of
purposes. The most common Secured Loan purposes are for Home Improvements and
for Debt Consolidation.
Home Improvement SecuredLoan A loan
that is secured on the applicants home address for the purpose of Home
Improvements. The loan can be used for a new conservatory, renovations,
extension or simply for double glazing. Almost any form of home improvements can
be funded by a secured loan. You may
find that some secured loan lenders will require proof of what you will be using
the funds for. This can be provided by simply gaining a written quote from
someone who you are looking to have the work done by. Chances are a Home
Improvement Secured Loan will actually increase the value of your property so it
will be money well invested.
A loan that is secured on the applicants home
address for the purpose of Debt Consolidation. The loan is generally used to
consolidate (pay off) all existing credit by putting it into one secured loan
and this generally reduces the monthly payments and therefore frees up more of
your monthly income to use for more exciting purposes than clearing credit
cards, store cards, loans or hire purchases! Sometimes the only way in which the
monthly payments can be reduced is by taking the Secured Loan over a longer
period than what the existing credit is currently on. This can increase the
amount in total that you will pay back but customers who take a Debt
Consolidation Loan generally are more interested in the reduced monthly outgoing
on credit.
A Secured Loan can be used for other purposes besides Debt
Consolidation and Home Improvements. They can also be used for a Car, or
Wedding. Generally Secured Loan lenders do not raise finance for Business. For a
Business Loan it may be a better route to contact your local Bank or Building
Society.
Why would I want a Secured Loan instead of an
Unsecured Loan?There are many reasons why.
Repayment Period
A Secured Loan can normally be taken over a
longer period than that of an unsecured personal loan. Unsecured Loans can
normally only be taken over a maximum of 7 or 10 years. Some Secured Loan
Lenders will allow the applicant to take the finance over a 30 year period and
most will allow the finance to be spread over 25 years worth of payments.
Obviously by taking the loan over a longer period reduces the monthly payment to
the applicant – although you must remember the longer you take the loan over the
more interest you will pay.
Loan Amount
A Secured Loan amount can often be a lot higher
than that of an unsecured personal loan. Secured Loans can be taken up to
£100,000 – with some lenders even allowing applicants to borrow more. An
unsecured loan lender will normally only lend up to £25,000 which sometimes just
isn’t enough. We may surprise you with the amount you can actually borrow. Let
Loan Machine do the hard
work to find out.
Poor Credit
If you have poor or adverse credit then the
chances you have of getting an unsecured personal loan are very slim. Poor or
adverse credit can include many things, CCJ’s (County Court Judgements),
Defaults, Mortgage Arrears, IVA’s, VAR’s, Discharged Bankrupts and Missed Credit
Payments. If you have any of these then your best route for gaining finance
could well be via a Secured Loan. These don’t necessarily prevent you getting a
Secured Loan – there are many lenders that will lend even if you have a
combination of CCJs, Mortgage Arrears and Defaults. We may surprise you by
finding a loan that you didn’t think you would be able to get. Let Loan Machine do the hard work.
Equity
Equity in your property will help you obtain a Secured
Loan but that doesn’t mean you have to have equity to get a Secured Loan. Loan Machine has access to
lenders that will lend finance above and beyond what your property is currently
worth – although to do this you generally have to have a good credit rating. But
what have you got to lose? We may surprise you by finding a loan that you didn’t
think you would be able to get. Let Loan Machine do the hard work.
Self Employed
Self Employed people can often find it very
difficult to raise finance. Secured Loan Lenders open the door to the Self
Employed. They offer the ability to Self Certify your income. So even if you
haven’t been self employed for long or you cannot prove your income via accounts
then that does not mean you cannot get a loan. If you are Self Employed with bad
credit or adverse credit you may think you cannot get a loan – this isn’t
necessarily true. We may surprise you by finding a loan that you didn’t think
you would be able to get. Let Loan Machine do the hard work.
Low Income
Although all lenders will only lend responsibly to
people who can afford it, Secured Loan Lenders generally are more flexible in
their criteria. Some Secured Loan lenders will let you use Disability Living
Allowance, Incapacity Benefit, Working Family Tax Credit as well as many other
incomes to fund a loan application. We may surprise you by finding a loan that
you didn’t think you would be able to get. Let Loan Machine do the hard
work.
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